Anyone knows how the process works, including bidding and other processes involved. Appreciate your assistance.
- HUD forecloses and now owns the property
- HUD has the home inspected and appraised
- HUD lists the property with a local Realtor with whome they have a contract for services
- Bidding begins with Owner-Occupant buys only.
- After 9 days have passed with not acceptable O/O bids, the property is opend up to bidding by “All Bidders”
- Bids must be accompanied by a check for certified funds in the amount of $500 or, if the bid exceeds $40K, $1,000.
- Bids are opened at the close of business of each day and the hights “net to HUD” offer received over HUD’s minimum acceptable threshold wins the bid.
- If no acceptable bids over the threshold are received, the bidding continues on a day-by-day basis. After a period of time (can’t remember the exact length) with no acceptable bids, HUD may reduce the price and the process starts over with the O/O bidding.
Your bids must be placed through a HUD approved Realtor. Do NOT bid during hte O/O period as an investor. You and your Realtor can face penalties and it’s just not right.
I think I got the worst of it…
Keith
Thank you for responding. My broker is HUD approved, but does not know the process as it was a long time ago and has not done any work with HUD even after the approval.
Where do I go to bid for the properties?
Can I see the properties from inside?
How to obtain the HUD key?
Who do I give the deposit to?
Is HUDs asking price usually close to market value?
Thanks a bunch.
Asad
I’ve looked at HUD homes over the internet for awhile now and recently took a real estate class where we talked a bit about this topic.
You would bid at hud.gov where you can also see much of what the property is all about with disclosures, photos, etc.
I believe you should be able to see the property from inside through your realtor or, if you’re in the area of the property there is a posting on the doors of these properties with contact information.
I’m not sure who gets the deposit or how that works.
For the most part the houses are near market value. You won’t find $1 homes for your own use as the myth goes.
Some of the houses are pretty rough, but I’ve seen some that look ok. Just a matter of the area you’re looking in.
naperbill
Very good Keith. There are a few small differnces here in Florida, but right on for the most part.
You must put your offer in through a registered HUD Broker. No big deal, almost all Brokers are registered. But you better find an experienced one. There are so many little things about HUD properties that most agents will not know. If you’re financing, the closing cost are extremely important. HUD is only allowed to pay certain things.
HUD’s are all priced by a licensed state appraisal. They are suppose to account for the condition. As-Is.
HUD will always take less than the list price. Its all about their NET.
Registered Brokers have a key. They let you in.
Oh, HUDs are marketed by different companies throughout the country. Certain companies cover certain states. They all have websites. Mine, in Florida, even has the home inspection on line. Do a google search for HUDs in your state.
HUD properties can make for some wonderful investment opportunities. If you can live in it for a year, you should check them out. Owner occupants get first dibs over investors.
REO,
My broker (I am his Realtor) is certified HUD broker. Of coure, he does not know anything about the HUD, so he asked me to do more research on it. Now, I do not know about those little things you are referring to. BTW, how does the financing work in HUD foreclosures, you said something about the closing costs? Also, how much less would they take from market value assuming property is in average condition and has market value of 100K. Finally, what is the closing procedure for HUD properties. Okay this time it is finally, my understanding is that HUD foreclosures are properties that were financed by previous owners using FHA or VA, is that true? Is any documentation available on the net? Thanks a bunch.
Ok, first thing you need to do is find out which company handles for state. do a search on the web for HUD foreclosures in your state. Most companies will hangle 3 or 4 states. National Home Management Solutions handles Fl, NY and NJ. These companies have their own websites where you can read all teh info needed. You place the bid on line through their website. Most of the info you need, you can get from their site.
HUD will pay up to 5% of the purchase price in closing cost. You will put a dollar amount you want them to pay in the bid. Remember, HUD will pay only certain things, no lender junk fees! You can read about this from their website, under closing cost.
HUD will accept offers from around 85% of the listed price. Trust me, NO less. you are wasting your time. Doesn’t matter about the condition, it is strictly based on the list price.
HUDs are listed in 3 categories: Insurable, Insurable with escrow, Unisurable. This only pertains to FHA financing. You were right, a HUD property was a FHA loan that was foreclosed on. HUD only markets former FHA loans. If the property is listed as Insurable, then your clients can bid on a HUD with FHA financing. This should tell you that the property is in pretty decent shape; and Investors can usually forget it.
HUD has chosen closing companies/attorneys that handle the closing. You can choose your own, but HUD will not pay some of the fees. Cost your buyers extra money. You can get this info from teh web once you find your states company.
Here is the link to find the HUD listings in any given state…
http://www.hud.gov/homes/index.cfm
Deperado,
Here is the link for Illinois (I assume that you want Illinois in that you are in the “Chicagoland”…):
http://hud2.towerauction.net/IL.htm
Talk to your Realtor. If he is HUD-certified and sends you out to do his research, how “certified” could he be. Ask him for a referal in his office that really understands the HUD procedures! A quick look tells me that HUD properties in Chicago proper are going for over HUD list price, some significantly over!
Keith
Desperado,
I’m a realtor in Salt Lake. HUD properties in our market have been getting 10 to 15 offers on them and don’t tend to be as good a deal as they use to be. Our market has gotten pretty hot in the last year or two though and I’m not sure about what’s happening in your market.
A couple ideas, look for properties with upside potential that don’t attract as much attention. I’ve seen some good deals on For sale by owners or under priced properties. Good deals that get listed by agents are hard to get in an up market, you have to get an agent to look every day for you that will deliver the goods. Especially if it’s your first deal.
Good luck!