Are HUD/REO Contracts Assignable?

Posted by on Sep 1, 2014 in Blog | 0 comments


Ask the Pig





I recently had a student ask me if I flip HUD and/or REO foreclosures, and whether the bank contracts are assignable.  Since it’s a question that I’m asked fairly often, I thought it would make for a great “Ask the PIG” post for all of my subscribers.  The short answer is no, bank foreclosures (REO’s) and HUD/VA foreclosures do not allow assignments.  The answer to the 2nd question is also no, I don’t flip REO’s and HUD foreclosures, but it has nothing to do with the assignability (or lack thereof) of the contract.

My problem with bank owned properties and HUD foreclosures is that they are listed on the MLS with a Realtor.  Now, don’t get me wrong…I don’t have anything against Realtors.  I was an active real estate agent for over 10 years, and still hold an active license to this day.  However, the Realtor’s job is to get top RETAIL value for the property, which is in complete contradiction to my goal of getting the property DIRT CHEAP!

Additionally, the MLS brings into play the arch nemesis of creative real estate investors, or those trying to get a deal on just about anything…and that is, COMPETITION.  When you place a property on the MLS, you have one house being viewed by thousands of people, which is inevitably going to drive the price up.  Whereas when you find a property “off the radar”, it’s typically just you and the seller, or you and one other investor and the seller.  It’s just simple supply and demand.

Add to that the fact that the Realtor is going to go “by the book”, and require an earnest money deposit, proof of funds letter, etc…and you start to see why flipping foreclosures isn’ the easiest way to make a buck in the investing game.  However, if by chance you do find a killer deal on the MLS (needle in a haystack), and can jump through the hoops necessary to get it under contract, don’t allow the assignment issue to kill your deal.  If you have a decent spread on the deal, you can easily do a double closing and use no-qualifying transactional funding to purchase on the front end.

PIG members…check out the answers to more great questions like this in the “Audio Recordings” section of the Member site for all of our past Q&A calls.

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  1. Florida Posts Highest REO Total for October | Professional Investors Guild (P.I.G.) - […] highest foreclosure rate of any state in October, but Florida still led all states by far in bank repossessions…

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