Bidding on HUD & VA homes

Foreclosures, Short Sales, Tax Foreclosures
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For those who bid on HUD & VA homes…

  • Can you reasonably get houses for 80% or less of FMV? Or do bids usually wind up going higher, or lower? Or does it vary? And if so, why?
  • I’ve heard that HUD prefers giving homes to owner-occupiers vs investors. Is that true? If so, does that make it very hard to get HUD homes?
  • Also, if you can tell me any more details about the whole process of buying a HUD or VA foreclosure … I’d appreciate it.

Thanks!!!

2

There is a period of nine days that Owner/Occupants can bid before investors can bid at all. If the property is unsold, the property is opened to “All Bidders”…

When I was in Louisiana, I purchased a HUD for $51,500, put about $2500 into it, rented it out for $650 a month (raised it to $675 after a year) and sold it for $72,500…(after putting another $850 into it - termite remediation and paint)…

You’ll need to find a HUD-authorized Realtor (there’s a lot of them) and submit your bid through them.

The price they go for depends on the area…here, they go for over list if they even make it out of Owner-Occupied.

Keith

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Where are you at?

I wonder why people would pay over list … my guess is either there is a lack of supply and too much demand … or people just don’t know what they’re doing <?>

4

I am a HUD broker and I would be happy to help. If list is under what an investor thinks the property is worth(after owner occupy period) than often the property will go for list. Many properties do not go far over list.

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Oops…apologies, I just read the rules. First time logging on and I didn’t realize I wasn’t supposed to post my email.

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ChiBroker - you got it…you can’t put your contact information and you can’t make “contact me” posts…you can, however, modify your own posts. In the box where your post is there is a button that says “modify”…it will allow you to modify your own posts…

In the area I’m in now (Western Colorado) the market is rising and the HUDs usually represent a good value locally…people often pay thousands over list and still apparently do OK.

Keith

7

- Can you reasonably get houses for 80% or less of FMV? Or do bids usually wind up going higher, or lower? Or does it vary? And if so, why?

Yes. I got my first at 74.8% FMV (only needed $950 in repairs). Just got one a couple months ago at 77.2% FMV (only needed $1,150 in repairs). There are usually 5-15 investors bidding on the “good” HUD f/c’s, but every now and then one will show up that isn’t bid on much (or at all).

- I’ve heard that HUD prefers giving homes to owner-occupiers vs investors. Is that true? If so, does that make it very hard to get HUD homes?

Yes. As others said, there is a period when only OO alone can buy the property. After that, investors and everyone else can buy it.

- Also, if you can tell me any more details about the whole process of buying a HUD or VA foreclosure … I’d appreciate it.

  1. Find a HUD-registered broker/agent.
  2. Give them a cashier’s check for $1,000 (or $500 if the property is <$50,000). Instead of physically giving my agent the check, she makes a copy of it to submit bids with. If I win, then I’ll give her the physical check to go along with my package.
  3. Submit offers through your agent on HUD homes you like. As an investor, you can do this during the OO-only period, but it won’t get reviewed until the period is over.
  4. Wait to hear the news on if your bid was the winner.
  5. Be prepared to play the “hurry-up and wait” game if yours is the winning bid. Also, be prepared to have your documents gone over with a microscope. If an error is found, your agent has 48 hrs to resubmit those documents that are in error. If it’s a preapproval letter from your loan officer that is in error, better hope he’s in town to redo it. HUD has no problem canceling the contract if things aren’t done how and when they want it.
  6. Have an inspection performed as the one HUD has done beforehand usually doesn’t tell you everything that is wrong. For instance, in my last HUD purchase, the HUD inspection report said that the master bedroom door had a hole in it, which it did, but they failed to say that almost ALL the interior doors had fist-sized holes in them and needed replaced.
  7. Hear nothing from HUD for weeks.
  8. Get a notice about 45-60 days after your contract was approved of when and where the closing will take place. HUD requires that ALL documents (including those from your lender) be in their office one week before the closing. My broker dropped the ball on this one the last time, and I had to pay a $375 extension fee (I was reimbursed $250 from HUD for the unused days and the remaining $125 from my broker, since it was his fault).
  9. Close. As with all closings, make sure the HUD-1, Deed, etc., are all correct. On my last one, I overlooked the fact they forgot the legal description of the property on the Deed, so I had to call the title company afterwards and get the mess straightened out, which wasn’t fun at all.
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dont suppose i could get in touch… u seem to know a lot. will u send me a pm if you get this?