Hello to all;
Is anyone familiar with the Hud 1 process? I was recently contacted by my realtor and she showed me some houses that has to be purchased through Hud 1 process. (which means you have to bid through a realtor, the highest bidder claiming the property and they also have to own it for one year before resell. Is there any way a wholesaler or bird dog can make money off this deal?
A “HUD-1” is a form, not a process…it is a settlement statement that outlines a real estate transaction and shows where all the money goes.
http://www.hudclips.org/sub_nonhud/html/pdfforms/1.pdf
HUD homes are properties that have been taken back for non-payment and are being sold with a bidding process through a HUD-authorized Realtor.
http://www.hud.gov/homes/index.cfm
Keith
Your agent is talking about HUD homes, which are FHA default loan properties. There is a lot to know about selling HUD homes. One thing to know is that an owner occupant will be the first to win the deal if their bid meets HUD’s reserve amount because HUD would prefer to sell someone who will own and live in it.
Go to www.hud.gov …it tells you all about buying HUD homes.
Do you think Hud would go below 82% of arv or asking price or of bpo if you were the only bidder and a first time owner who would live in the house for 2 years? Just wondering from your experience.
In my experience it depends greatly on the market that you are in (ie. rising, stagnant, falling). The directors of the area do their research as well and price the property “properly.” At times of great appreciation I have seen many homes go for above the hud asking price. In falling markets I have known investor buddies who have purchased homes for upper 70% of asking price. It is fairly easy to ascertain the price that they will accept…under bid and see. If it is out of the owner occupied preference stage they will let you know the next day. After two or so bids you can typically call, or have your broker call the hud office and they will tell you the minimum they will take.
Bottom line. Make sure the numbers work for you, and your goals for the property.
there is a huge benefit to bidding on a HUD home as an owner occupant. HUD would take less but you have to remember that you won 't know if you are the only bidder. You could be competing against other ppl who are bidding owner occupant. you need to give your absolute best and final when bidding and that just may be the list price. HUD homes are already for the most part listed below FMV. To what percent is the question. Have your agent send you sold comps…the most recent sold for the same house and also tell her you want to see the property condition report. This is listed on the HUD site I told you about…it is another plus to these houses…a preinspection is done however I would not rely on this inspection report if you get the house…I would pay an inspector to inspect the house for you…HUD gives you 15 days to do so which a great amount of time…
I have never head that you can call and find out the minimum HUD will take. They will drop the price each month and allow simultaneous offers again with the price reduction. There is not a sole at HUD that will tell you the minimum bid you need to make and if they do give you an amount, I am almost sure it will be the list price that it is currently.
If you do end up winning the HUD bid make sure that you know that when you do the inspections it is your responsibility to turn on and off all of the utilities which can be rather costly and at many time in efficient, also if you happen to check the plumbing and its leaking into the house prepare to pay. I have bought and sold around 25 of them and have just about seen it all when it comes to these babies.
Amen to that Eric. Had a HUD under contract and the property condition report said water pressure was able to be maintained but when water was turned on, a huge waterfall came out of the kitchen ceiling. Buyer was an Owner Occupant so house became uninhabitable and the lender would not allow the loan unless this was fixed…and guess what, HUD does not allow repairs prior to closing. Deal fell through.