HUD Auction Questions

I am wanting to bid on a home listed on the bidselect hud auction site, the house has been listed for over a month. The home was originally listed at 67K, but the price has been reduced to 60K. So far the only bid was for 40K. I would pay up to about 50K. The house would probably go for at least 80K after about 8K in repairs. I just have a few questions:

How often does HUD actually accept offers below asking price?

How would I go about funding this type of deal, since HUD requires proof of funds or a pre-approval letter before a bid will be accepted?

Any help would be greatly appreciated,


You probably need to talk to the realtor listing the property. There’s a lot of rules and regulations governing the sale of HUD foreclosures.

Contact a hard money lender and pre qualify, they’ll give you a letter.

BUT… most HMLs only lend 65% LTV and your house is 72.5%, so they’ll only lend 52K, you’ll have to find the rest, including closing costs and holding costs.

I have read somewhere on huds web site that thier standard is no lower then 10% of asking price. but thats not going to stop me. im going to bid 30,000 on a hud home listed for 49,600. They can take it or leave it. because anymore then 30,.000 just isn’t a deal for me.

HUD will accept offers below asking price. They are funny. Imagine the most motivated seller. Now imagine a seller who doesn’t care if they sell or not. They are a sort of contradictory blend between the two. I’m licensed to deal with HUD as a broker, but rarely do mainly because I deal with comm., but also because they make it a pain as far as procedure. Occassionally you can get great deals. HUD will contribute to closing costs and subtract from net proceeds. They accept the bid with the highest net proceeds.

The best thing to do is find a local real estate agent/broker that deals with HUD’s a LOT and get their opinion as to what bottom-rock % HUD will accept. Like johnnyg, I would submit lowball offer after lowball offer and get nothing accepted. I hooked up with a local agent who told me she has never seen HUD accept a bid under X%. So, I used that figure in my future analysis. If X% under list price was less than Y% under FMV, I would make an offer. Lo-n-behold, a couple of offers later and I won (the other offers were beaten out by other bidders).

I bid on a few and won one. It took asking price to get it…It’s tough to low ball someone when the people analyzing bids are sitting in CA with million dollar homes. OH just isn’t the same market but they don’t see the differences like residents do.

How do you get the financing? Are you going to be occupying? Have you visited a bank? It depends on your plans for the property…there are a lot of options.

In my experiences with HUD, they do not generally accept bids that are more than 10% below asking price. The key word here is "generally’. I have had one purchase that was originally priced at $60K. I was the only bidder for 6 weeks. Still listed at $60K, they took my bid of $47K.

what it take to get a bid is all over the map and depends a lot of variables, time on markey, number of bids, etc, etc.

the last one I won I bid at 81% of list after several price reductions. it was a great deal, but it had been listed for several months with no activity. after a very modest rehab, I sold it for 145% of what I paid for it.

HUD will occassionally take bids at 30% discount from asking price.