I hope someone can answer this relatively quickly. I was informed by my real estate agent that I can only bid once on HUD homes.
This sounds like :bs to me…
The house has been on the market for 3 months and it has a few problems. It was assessed by the area appraisal district(tax purposes) for 63900 and the price is 60k. I am sure it would sell for 79k or more easily once rehabbed.
I want to offer 55 for the home since it has $4500 worth of damage to it. Do you think the bank will accept my offer?
I’m not sure how many times you can bid, but www.firstpreston.com has the rules listed. I do know they start out with only owner occupant bids, & then open them up to investors if they don’t get any bids.
I would need to know what the “acceptable bid to Hud” is in order to make the correct bid.
Maybe you guys can help me make the decision.
The list price is 60000.
The tax assesor’s appraisal is 63900. (land value went up 6k from last year, but the home value went down)
Homes in the area sell for 75000-80000.
There are at least 10,000 worth of damages.
It’s been on the market for more than 45 days.
I don’t think anyone has made an “acceptable bid to HUD”, or no one wants to deal with the repairs.
What should I offer if I have only one offer to make? When my agent sends the contract, what proof should I include to make them accept the bid(inspection, appraisal for damages)?
From the information that I have read and gleaned from talking to HUD approved RE brokers (read: No personal experience), acceptable to HUD means within $1000 of their value and outside financing. I believe that they will accept inhouse financing, but prefer not to do that. If they do not get an acceptable bid within a certain period of time (I’ve not figured it out yet), they will pull the property off the market and then re-list it at a lower price. As you may have realized, HUD will not accept investors for a period of time after they first list a property. If they do not get an acceptable bid, then the bidding will be opened to investors. On your example, I would suggest that you wait and keep watching the listing. There is not enough spread between the after repair value of the property and the amount that HUD has set the property value. Typically, when HUD re-lists a property, they reduce the price by 10 percent.
You can only have one bid at a time in on a property. If you want to change your original bid or something, you must go to the Brokers page and cancel your original to re-submit your modified bid.
I am currently heading to close on one in Flower Mound, Texas. The senario ran like this.
The property was originally listed on 7/23 for 122.5k and is posted as “Owner Occupant”. HUD always allows owner occupants the first right over investors in this initial listing period. As it comes out of this period, it will change to “Daily- All Bids”. On 9/6 they dropped the bid to 110,250. I place a bid of 104k which was accepted the next day. You can see these data fields by going to www.hud.gov. While you are there, drop down to look at the “Sold” section also. In my area Hud consistantly takes 4k-15k below their listing price, what ever it may happen to be at the time.
Never submit a bid only 1k below their listing price, they will take that so fast your head will be spinning. There is no such thing as a dollar amount relative to listing that is “acceptable” to HUD. Like any other seller, the longer it is on the market without selling, the more flexible they become.
As I am sure you know, HUD’s can only be purchased through a Realtor, or more accurately, a Broker. As an investor, I don’t care because HUD pays the Realtor commission. In this case I also have them paying $2250 in closing on top of the 5k commission to Realtor. In the meantime I have had the utilities turned on for two working days allowing my inspection for a system check, this cost me $23 at the city utility dept. This requires a signed authorization from HUD, but you have to ask them for it, they won’t offer it as a normal course of events. We anticipate closing between the 16th and 23rd of Oct. to give you some frame of time involved, but this is a cash deal. No doubt if financing was involved, it may take considerably longer. Tax assessed on this is 133.8k but as our taxing entities have gone completely insane, the actual market after re-hab is closer to 125k-128k for a quick flip. There is only about 3k-4k in repairs needed.
Very few people are aware that HUD also offers Police and Teachers a 50% discount as Owner Occupants, (Yes FIFTY percent discount from current listed price).
As pointed out in a previous reply, the margin on your property seems pretty sad to me. I would not mess with it unless you can get at least 15k-20k margin on re-sale after repairs, marketing etc, unless you intend to live in it.
Bottom line, DON’T you dare bid 1k below list price.
Good luck and still perform your own due diligence, do not rely on HUD numbers.