Looks like I made out well. Bought a nearly ready to move into HUD for 10k under appraisal. Question is, is it ALWAYS so slow and hard to do? The reason I ask is that everything seems to be an opportunity (according to my realtor) for HUD to say no. I walked into the deal pre-approved, with all my ducks in a row. OR<<<<Is this my realtor dragging his feet? I’m assuming the latter, and it’s getting quite frustrating, to say the least. Rest assured, I will not be using him again.
HUD is the Federal Government…the Federal Government is always slow. They work on their timetable, not ours. Remember on the day that you bid, so did hundreds of others…thousands of others if you look the country as a whole…
Keith (25+ years of proud government service)
I’m closing on my second HUD in a couple of weeks. I have limited experience but judging by what I’ve seen, you can always plan on close to 45 days from the time you are awarded the winning bid until you close. I’m sure you could knock time off if you paid cash and didn’t require title search.
Roger that! I appreciate the replies. I just began looking at a short sale scenario for my sister. She just got divorced and I’d let her use a 2 year option from me after I acquire it. I know it’s shaky ground dealing with family, but she’s my sis, you know?
As for the HUD: I know the government has it’s own idea of expediency, far different from the rest of the world. It’s that my realtor started out really well, and now is acting like I owe him something. It’s so bad that I won’t even talk to him, and I told him that from now on he has to deal with my wife. We also retained a lawyer in case he sours the deal.
Not sure about all over but in Texas, a realtor makes 5% on a HUD deal. It’s not a split deal like a normal sell where there’s a buying and selling agent. Thats great commission. Some realtors try and focus on these types of sales due to the high commission. He should be jumping through hoops for you. If not, chalk it up to a lesson learned and never use the guy/gal again.
Good luck.
Dealing with HUD is not so difficult when you have a Realtor that knows what they are doing. HUD is very particular about getting paperwork submitted in a timely manner and also fixing the paperwork quickly (within 48 hours) if something is in error. Statistics show that 1 out of every 3 HUD bids are cancelled primarily due to Realtor screwing-up the contract/documents or not understanding the process.
When purchasing a HUD home you are buying as-is and the listed price is determined by an appraisal.
HUD focuses on the net price when submitting a bid which is the gross price less closing costs (up to 5%) and Realtor Commission (up to 5%). It’s not always in the best interest of the Realtor to request a 5% commission because they may lower the net and may be outbid. I know from personal experience as I’m a broker in Colorado and work with many HUD buyers. My Broker is a local listing broker for HUD (30+ zip codes) and we marketed 600+ homes for HUD in 2005. Although HUD is pretty cheap as my Broker gets only $160 per transaction (no listing % like a typical RE transaction) for listing in MLS and placing a sign in front yard. The rewards comes from the sign calls and helping home-owners/investors purchase these homes. I usually request a 3% commission to keep the net higher and hopefully increase the chances of winning the bid.
I’m looking forward to grabbing a HUD home as an investment in the near future but HUD will not let me purchase one that is listed from our office which is fair.
Whats the ARV? 10k does not sound much.
I met today with a broker/investor who deals exclusively with huds. I ended up placing 3 bids today and will be working with him to place bids on weekly basis.
I am hoping to get 1 every month or two, but I am looking at 75%to 80% - repairs AVR.
Honestly, I feel it was a steal. We don’t intend on doing a full year rental setup, as this house is on a lake and we could do better with weekly/weekend rentals. We have contacts at the lake to do maintenance and cleaning as well as management. We’re looking at 700-800 a WEEK, or $125 for the weekend. Works for me!
The house was completely redone about three years ago. Roof, insulation,plimbing, new floor joists and subfloor, etc. SOMETHING went bad there and HUD got it. The second story looks out over the seawall and over the lake for at least 2 miles of unobstructed view.
The fact you feel you are having issues with the closing and don’t know why, tells me all I would need to know about your agent. HUDs are easy if you have experience.
The slownest has nothing to do with the government, one of three things…
- your agent
- HUDs closing agency or yours if you chose your own
- title issues
oh, and if you are financing then - your lender
But as a buyer and client, you should know exactly why. Trust me, HUD doesn’t want out of the deal.
HUD recently rebid their M&M contracts around a year ago. At least here in the south. It has been a major aggravasion dealing with the newer companies involved. Maybe its similar in your area.
edcolorado,
I would not discount the commision. I’ve been selling HUDs for years and figured out that it really doesn’t matter in the long run. I’m in a huge competitive market and we still get a majority of the bids. The biggest thing is buyers need to work with experienced HUD brokers. Most have no clue. It only hurts the buyer. Agents can easily kill a deal with their lack of experienced knowledge - lack of paperwork, not knowing about the closing cost structure and not knowing how to match the HUD with the buyers particular loan. There are tons of little stuff involved with HUDs that hardly any agents ever know. I say if you are good at selling them, then you are in demand. There is no reason to discount your hard earned wages. And if your having to cut commisions to clip the deal, then the buyers aren’t bidding high enough. But, boy are you fortunate to be working for the Broad Listing Broker. Excellent opportunity.
good luck
REO
Thanks for the advice. I’ve only been working HUDs for less than a year but I have learned much and it seems every deal I learn something new. I’m new to this board and try to keep a low profile while absorbing all the great info everyone offers. I haven’t dipped my toe in the water yet, but I hope to grab a few HUD homes this year.