HUD as an investor

I ran across a foreclosed HUD property that I would like to submit to an investor as a bird dog. However, would like to find out more about the way HUD works with investors. Does anyone have any advice on getting HUD properties as an investor, not a owner-occupant. I believe that an investor has to wait until the property is open for bids by All Purchasers. Also, I believe you have to use a HUD certified broker or agent to submit a bid.

Are these above statements true?

Does anyone have any personal experience of bird dogging, wholesaling or investor purchasing a HUD property?

Do they take you through a lot of red tape? If so is it typically worth the hassle?


I just bought a HUD here in Louisiana as an investor. It is actually pretty easy.

  1. The HUD property is listed. Owner occupants have nine calendar days during which to bid the properties. According to my realtor, it is illegal for an agent to submit a bid for an investor during this period (two agents here got caught and lost their real estate licences and the brokerage can lose their HUD abilities).

  2. After the nine days, they will take offers from anyone. The offers are opened daily (at noon EST, I think) and the highest ACCEPTABLE “net to HUD” offer is accepted. The “net to HUD” is the actual amount HUD will receive after closing. The more things you ask HUD to pay, the lower the “net to HUD”. In order to make an offer you have to give your agent a certified check for $500 for homes under $50K and $1,000 for homes over $50K. If you do not get the home, you will get your check back.

  3. You are correct, not every realtor or every real estate firm can deal with HUDs. Luckily, the agent I work with can. Here in northern Louisiana, the do not use a lock box system, the HUD door locks are keyed alike. Each real estate firm that is authorized, has a key.

  4. HUD pays a 6% commission. Here it is split to the listing agent (one agent handles ALL of the HUDs in northern LA) for 1% and the selling agency gets 5% (my agent likes that!)…

As for red tape, there was not a lot. A few special government forms. Most of these forms are to reiterate that the homes are strictly “AS IS” and that after closing you have no recourse against HUD. The closing was pretty much standard. We closed in about 30 days (it MUST be closed within 45 days) and it took about 30 minutes.

I bought the property as a ‘buy and hold’ so I have no knowledge as to flipping…I would think that you could do simultaneous or consecutive closings with little or no problem. I paid all cash and will get another appraisal after fix-up and will get all of my cash back on a re-fi. In this area, rents are pretty high so I will have a good positive cash flow when the dust settles. For me it was well-worth any ‘hassles’.

Here is some info:

Thanks for the info, that spells it out for me. I have one question though.
When does the bidding stop and they actually select the highest “net to hud’” bidder. For instance do they take bids for a certain amount of time, example: they accept bids for one week and then after that week, they select the highest acceptable "net to HUD or is it based on a daily basis? Basically, if I make a bid, how long wil they accept competitive bids on that property before they declare a high bidder

The person who answered your questions was right on. I have one thing to add though that may help both of you. Find an agent who will take between $500-$1,000 commission for volume. As you know, all HUD cares about is their net. So in order to make yourself more competitive, find a broker that will take a discount like this for volume, hence making your net to hud higher and you more competitive!
If you can get your broker to take the commission on the back-end, that would be even better!

In terms of how long, typically HUD give you a week to bid from the time the list comes out. One thing that you should also do is check out the “Bid Statistics” to see who the competition is, how they are bidding, meaning are they using the strategy I talked about and how much? You will soon find out who your competition is.

Best Regards,
Jeff Adam


After the initial period (which I don’t know a lot about because I’m not going to live in the property), the bids are open daily. If there is/are bid(s) that meet the HUD’s minimum threshold, they will take the highest ‘net to HUD’ offer. If no one meets the threshold, then the bidding will go on to the next day.

Here where I am, the decent houses (usually reasonably priced) go the first day of open bidding. The one I bid yesterday (but didn’t get) was listed for $32K but actually sold for $35K but it was severly underpriced in my opinion (by about $15K). The one I bought last month listed for $53K and I got it for $51.5K

Zion- I just wanted to add a thought to add to Jeff Adams post. HUD only looks at its “net to seller.” The broad listing broker for that county gets 1% to list the property on the mls. The catch is that agents can GET UP TO 5%. So if you think you are cutting it tight in terms of MAO, see if your agent will do the usual 3% coop fee. They will not do it for any less I can tell you.


I need a little guidance on this subject…

I understand that you have to bid on hud homes…however do any of these properties have an assumable mortgage or do you have to go through a traditional bank for financing…! I would think after about 5 purchases…the bank would stop lending you money…!

I’m sure these questions sounds both rediculous and trivial…however I’m new to this game and I just want to ensure that I understand the rules…


As KD told you, all HUD cares about is their NET TO HUD. She was absolutely right! You need to work out a deal with your agent to take a set fee. The system she set up will work great. You have to be competetive. There are brokers that will absolutely take less than 3% for volume. I have a broker that I pay $500.00 per HUD deal. Even if you pay $1,000 it is still worth it and make you very competitive.

In regards to if the loans are assumable, no they are not. You will need to get a hard-money lender or private lender… If you decide to keep the property, try a bank like WAMU as they will refinance it without all the seasoning issues. After you max out with an institutional lender on refinancing 4-5 properties, you can get a broker to find someone who will refinance for you, however the rate will be a little higher…

To Your Success!

Jeff Adam

so let me understand this…?? I will need to find a beautiful or trashy hud home…! Buy at the cheapest price possible…! Call a bank…ie Wellsfargo…or whoever for lending…and then hold the house until I am able to refinance…! Now heres the question…how many properties can a person buy through Hud and is that a 1st time buyers program…?

Where would I be able to find a descent lender…if I have a mid below mid grade credit score of 550…or so…?

I’ve been working on and these homes are in pre foreclosure status…is there any way I can speak directly with the owner…and see if I can snatch these properties from under the banks hands…!! Making myself a mint and helping the current owner out of a bad situation…? Or is it a krazy to think this is possible…! It’s seems that Realitytrac…is already steps ahead of you and have been taking bids on homes in preforeclosure already…! Some one help me…!!!


In regards to HUD, get a hard-money lender or private lender for the financing. If you are buying as a first time buyer, then get a good loan with a conventional lender. However, due to your credit, you will need to go hard-money or private lender. You can only buy one property if it is owner occupied.

Now in regards to realtytrac, you will need to go knock on the door and deliver an equity purchase agreement to people in pre-foreclosure. My advice to you is get the ones that they owe about what the property is worth and do a short sale.

You can sit here and question me to death. Get out there and educate yourself, take someone like Mark Sumpter’s short sale course. You can check it out at You have to educate yourself…

Best Regards,
Jeff Adam