REO Deal and flipping

To whom may help

I made an all cash offer on an REO property for 65% of the ARV. The property needs cosmetic repairs, but still I will have it inspected, just in case. I had my realtor put an “Assigment Clause” in the Special Provissions part of the board of realtors standard contract. The bank accepted the price but not the Asignment Clause, wich means I will not be able to flip it, and will have to close on it, probably fix it up and sell it. My numbers give me bigger profit this way, but I just did not want to mess around with the rehabs.
I’m preaproved for a Loan for 280K so technically I could buy it and close on it.
My question is: Has anybody gotten the banks to accept asigment clauses or the frase “and or assigns” after buyer’s name on the contract? Or is this just impossible?. I need to answer the bank soon, so I would appreciate any advice, since I don’t want to loose this deal.
By the way: ARV 227K
ASk 175K
Offer 145K Offer got accepted
House is in great Neighborhood, 4176 sqft, 4b,3fb.1hb,3car garage. YB 1984


I don’t have a “after the fact assignment” that will work. BUT a no seasoning refi (if cash out up to 90%ltv). No waiting to refi after you buy. So it it appraises for the $227K you can pull out 90% the next day/week.

If you want to try the flip get your investor ready to close and have them show up at closing willing to close (and fund). Sometimes a check at closing makes people change their mind on the assignment. GREAT REAL ESTATE FIND–KEPT IT UP.

Thank You, Money. I’m really exited about this one. Do you know where I can find sources of no-seasoning refinance, and can I get that if I’m buying on a conventional Loan. I’m just confused about the terminology and don’t know if you are talking about the same bank that will give me the loan or another one.

Hey Addy good going. I am just curious to know how is it that you found this deal (advertisement, door knocking or calling)? Good Luck!


Your answer is NO. Banks and lenders will not accept ANY offers with the “and/or assigns” in the contract. There are two simple reasons. One, the banks want to know who they are closing with. Most require a proof of funds letter or a preapproval letter before accepting the offer. If they accepted an and/or assigns, then the assignee may or may not be able to close the deal and the bank has no way of knowing. Two, banks know that people using “and/or assigns” are trying to sell the property for a higher price. If the property is worth more, then the bank wants it.



How about all cash? You may have to split the profit, however, you would have help with the revamp and sale.

Good luck! Frank

How did you make an all cash offer if you do not have financing yet? How did you find the property? Good Luck…!!!


With all due respect, when I started in this business I went to people with money and asked for help.

We can all buy with cash if we are willing to split the profit.

Regards, Frank

I do not use assignment clauses and do a lot of flips. The bank doesn’t know of the flip. Also a company that will refinance without seasoning is Long Beach. I have used them extensively. I have also been told that Wells Fargo will do refinances with no seasoning though it may or may not be under their Option One division.

what do you mean by seasoning?

OK. Here I go.

How did I find the property?
Answer: I found a a really good Realtor/Mortgage Broker/Investor. I came across him calling an ad on another property he was selling FSBO. As we got to know each other he offered to send me some really good deals on REO’s he could not buy just now. He did, Sent me the comps, the loan information on each one, tax info, how much was owed on them. I did my homework and went to see 5 of them, picked two, ran the numbers and made the offers through him. That night I prayed a lot. One was not accepted and the counter offer was to high and the house has foundation problems, so I kept working on the other one.

He got me preappoved for the loan with his company. But he know i have the means to come up with the cash if necessary.

I showed him I was for Real, that I have partners who want to invest with me, I also have great credit and the Loan was not a problem. He’s working on getting the loan ready for the clossing, If it is not, I’ll use partners or hard money lenders to close. I’m looking at 45 days for clossing, and 14 days for inspections and estimates for repairs.

I guess I just got lucky at last.
Thanks for the info on the assigment clause with banks.
Till next time
P.S. I love this forum. I have benn reeding and learining a lot from it.


My suggestion would be to use your own contract and put in the contract that it is assignable so that it does not draw attention to the issue. In dealing with banks, one never want to put “and or assigns” as the “buyer” and an added assignment clause will have the same effect. I have assigned plenty of contracts in dealing with REOs and I presume every contract as being assignable unless stated otherwise. I do not know how many times you have assigned contracts, but you better make sure your assignment contracts are written so the ‘assignment agreement’ is contingent on you being able to convey clear title to the end buyer. If not and something happens to the deal, the end buyer has grounds to come after you for offering a property you did not own.

Instead of assigning the contract, if you have an all cash buyer, why don’t you do a double closing?

I don’t think the REO bank will know or care, but I am not entirely certain. Has anyone done a double close with a bank as the owner?


“why don’t you do a double closing?”

What State are you from? That is a violation in New Jersey.

Regards, Frank


I hear people (attorneys, investors, realtors) say it is against the law in several states even when it is not. Some people are improperly advised by their attorneys even. It is a common, legal practice most places and I am surprised that it is a violation in New Jersey. Do you know what law it violates?

It is fine in Louisiana.


Do you know Mr. H. N. Douglas, of Baton Rouge? He is a very old friend.

(1) Triggering terms: Require full disclosure of financing details.

(2) Full disclosure: Require all parties in the transaction to be fully informed of each and every part of said transaction.

If you will profit in the transaction the seller of the Real Estate must know and approve.

Regards, Frank


I don’t know him. But, still confused about this topic. For instance, in the last double closing I did.

Seller 1 sold the property to me. The HUD-1 states this, the seller is fully informed as to who I am (the purchaser). The seller does not need to know where I got the funds from.

Not sure why Seller 1 needs to know that in the other room, I am immediately reselling this property. In that transaction, I am the Seller and selling to an all cash buyer. The only “strange” part is that the title company is using this buyer’s funds for me to purchase with.


If it is working for you good!


Man, there’s some wild stuff going on in this thread, so let’s try to tame them a little.

First and foremost, if you are dealing with a REO property (this is a property that has been foreclosed upon and is now owned by the bank), then you are not, let me repeat NOT, going to be able to use your own contract with your own special terms, etc. etc. etc. REO’s are VERY conventional, and your creative real estate methods will not apply to the buying. Maybe you can be creative in your financing, but it had better look conventional within the offer.
Why can you not use your own contracts? One, because 99% of all REOs are now listed with real estate agents. RE agents, and especially REALTORS, will use their own state approved and protected contracts. Yes I know that agents are supposed to present all offers, and some even will. However, they won’t get too excited with their presentation, and the bank won’t accept it anyway. TWO, most banks now require that the offer be presented on their OWN purchase and sale contract. Any other offers, even those presented on the standard agent’s contracts will be rejected.

Since you cannot use your own contract, then you cannot add in any special assignability clauses. Most standard agent contracts are NOT assignable unless both parties agree to the assignment in writing. The bank won’t agree, period. ALL bank/REO purchase and sell contracts are NOT assignable period.

Also, practically all offers made to REOs must include either a proof of funds letter or a preapproval letter, so a financing contingency is limited only to the property appraising/being approved by your lender.

These are facts, boys and girls, plain and simple. Exceptions do happen but are rare beasts.

Concerning double closings.

State laws may vary some, but in general, double closings are legal and valid as long as a: There is FULL disclosure in each transaction. b: each transaction is self-contained and separate from the other.
As far as a REO property is concerned, they will want to know where your financing is being obtained. In fact, as stated above, it is a requirement that you have a preapproval letter BEFORE the offer will be accepted.

Now, let me explain the double closing requirements.
a: Full disclosure. This doesn’t mean that you have to tell the seller that you’re going to flip it. It simply means that you have to be truthful in you contracts/forms/etc that deal with EACH closing. This is true whether you are doing a single or double closing.
b: Self-contained transactions. Simply put, you can’t use the funds from the 2nd closing to fund the deal for the first closing. At least, it can’t be put on paper that way. More so, you can’t close the 2nd transaction (you as the seller) UNTIL you’ve closed the 1st transaction (you as the buyer). Why? It’s illegal for you to sell something that you don’t yet own. If you do either of the above, what happens if the 1st transaction doesn’t/can’t close? How are you going to explain to the end buyer that they don’t own the house, because you never were able to sell it to them in the first place? Trust me, explaing to them is the least of your worries. Explaining it to the authorities is probably more important.

In short, if the first transaction cannot hold up on its own without the aid of the 2nd (like the funds from the 2nd), then it’s very probable that there is something illegal about your transaction.