All Forum Posts by: Janette Olano

@Mark Gallagher You fill out an Add Purchaser Addendum. HUD provides standard form for it.

@Account Closed Yes, you can add the buyer anytime in the 45-day period. You will sign the quit claim deed at the closing table. You can have it under contract either on your name or your LLC, it wouldn't matter to HUD. I have done both.

Thanks a lot, Todd! I have just started wholesaling a couple months ago here in Georgia and still have a long way to go with my buyer's list. These tips are awesome and I will try to implement all of them.

@Account Closed There is no getting passed the earnest money with HUD. You need to drop off the earnest money to the listing broker (or closing attorney depending on the Asset Manager) within 48hrs. If you don't, they will cancel the contract even if you have already submitted the signed contract.

What I do is, if I win the bid, I run the numbers. If they're good, I use my own money to put the earnest money down. I usually have it under contract for 45 days. I look for the end buyer during this period. If I find the buyer but the contract is about to expire, I submit a request for extension (for a fee), that gives me an additional 15 days. If I don't find a buyer in 45 days, I lose the contract. That's why you have to make sure that it is a good deal so the property will sell itself. 

Please note that when bidding as an investor in HUD, you won't get your earnest money back if you don't close on it. The only time you will get it back is if there is a cloud on the title and seller can't close.

I wholesale HUD homes but I don't double close to save me some money. Instead, I add the buyer as purchaser in the contract and sign a quit claim deed at the closing table. In that way, I don't need to come up with the funds myself.

I usually buy HUD homes at 50% or 60% of the listed price. Sometimes up to 80% if the number makes sense--this normally happens after the price have been reduced multiple times.

@Maria More Lendinghome.com provide 90/10 loans and funds up to 75% ARV. Their rates are pretty good too. You can find the details of their program here.

I can only think of 2 things:

1) Loss of earnest money. If you bid as an investor, you don't get your earnest money back if for some reason you don't close. The only time you will get your earnest money back is if there's a cloud on the title and seller (HUD) can't close on it.

2) Inaccurate repair estimate. All HUD homes have utilities turned off. If you would like to do an inspection, you will pay the field service rep to turn it on for you and will need to put the utilities under your name temporarily. As an investor, I don't normally turn on the utilities. I mostly rely on the PCR, which may not be accurate, provided by HUD.

@Peter Mokan

Feel free to ask me any questions, I'd be glad to answer any of them. You can also message me directly.

To answer your question:

I have my real estate agent license so I retrieve CMAs if I have access to the property's MLS (I have access to both GAMLS and FMLS). If not, I use good ol' Zillow to look for comps for the subject property. I usually find comps within a mile range with a similar square footage (10%+-) and look at the pics of each property to gauge what kind of rehab has to be done to the subject property to get to a certain ARV.

@Greg H.

I used to look a the bidding results but ever since they removed the downloadable excel sheet for it, I stopped so don't really have a data on that (I'm a software engineer by day so I have a couple of scripts I run to help me with my analysis).

However, as a licensed agent, I have the advantage of bidding to as many properties as I can in HUD (with the help of my partner). I always start low on my bid and slowly go higher until I get a counter offer emails. Based on the counter offer emails, that's how I know that HUD still accept bids lower than 80% (e.g. I just won a bid for 72% of listed price last week after an initial price reduction but I had to let it go since it does not follow the 60% rule (Price=60%ARV - rehab)

Someone who can do an appraisal based on the projected After Market Value. The property that will be appraised is a fixer upper and he will have to take into consideration the upgrades that will be done on the property based on the scope of work. 

We worked with an appraiser before where the market value submitted to the lender was based on comps which did not take the planned upgrades into consideration resulting into a much lower projected ARV.

After SAGE took over, I'm still able to get 2 properties for 80%. One had price reduction, both in extended period. Might have something to do with how distressed the property is.

If the asset manager there in Texas follows mostly the same rules as they do in my area (GA) then bidding 80% net to hud ($102.4k) on the listed price would immediately get accepted as long as you happen to be the only bidder or highest bidder on that day. I would normally bid a lot lower than that (60%) though since either my bid will get accepted or HUD will notify me the next day what's the lowest amount they will accept.