Hud Foreclosures?

Does anyone here have any experience with buying HUD foreclosures? Is that a good source of properties? Are the deals generally good? Any drawbacks?

You might not find these to be much value. You have to be patient and investors are the last group that can bid on them…the best deals are snapped up early.

there are strict guidelines to be followed when buying a Government foreclosure. First 10 days are only open to owner occupiers, then government, teachers, and police officers. then open to everyone. IF it gets that far…you can bid.

the minimum bid accepted is 87% of the offering price.
if the market value is $125,00 but is listed for $100k you can bid 87% of the 100k. but they look at NET when accepting bids. you have to pay real estate commissions…both sides.

here is how it works…$100k listing price * 87% = $87,000 * 106% (real estate commission) = Minimum bid is $92,220. Each day the bids are open and the highest bid that meets the minimum is accepted. You could do all the work, put in your bid and lose it by $5…


good info…thanks!!!

reddoor what is the 106%? 106% of what?


the 6% real estate fees…you get the bid amount by multiplying the minimum bid (in this case $87,000) times 6%. this equals $5220.

to save a step you multiply $87,000 by 106% = $92220

it is no magic number, simply a math shortcut.

The information in the second posting is not quite correct. The HUD house is posted for Owner Occupant for NINE days (vis-a-vis 10 days). If there are no acceptable bids, the bidding is open to everyone (there is no special period for teachers/law enforcement) including investors. Here in this area, new postings go up on Thursday and, if the property does not sell to an owner occupant, the open bidding starts at midnight the following Saturday.

As for teachers/law enforcement, there are special PROGRAMS but not special bidding periods (see and where teachers and law enforcement can buy certain property in “revitalization areas” at 50% – promising to stay in the property for at least 3 years.

All of this information is available at:

Hope this helps clarify.


This sounds like what I was told by a realtor about a house I was interested in. It was open to owner/occupyer first then everyone else. Never got to make an offer though,someone got it first. Looked like a good deal too! Thanks for the info.

The good ones here get taken up by O/O (and rightly so, it is actually a federal program0…once in a while you get a decent one. I got a nice little 2/1 for just over $50K. It needed about $3K in repairs. It is rented for $650.

I have been watching the HUD houses in ND fairly close over the past two years and there have been two great deals that have been posted and sold in the required time frame. One house was (in my estimation) about $30,000 undervalued. The second house was undervalued but it needed a lot of work. It hit the invester market but it lasted one day! You have to able to recognize an good deal when you see it and then you have to be able to act on it quickly. Many Hard Money Lenders will not lend on a HUD deal unless you have a line of credit with them. Many of the houses that I have observed over the past two years have been at market or slightly below not the 65% LTV ration that HML like or require.

Best of Luck!

My advice on HUDs is to look at it and do your ‘homework’ during the Owner Occupied period. If the house is still available at the end of the O/O period, you should put in your offer (thru a HUD qualified Realtor) the very first day that you can. You are probably not the only judge of value! Here in this area, the really good ones rarely make it out of O/O and if they do, they are scarfed up the first day by investors.