Posted by Pat IN on April 05, 2002 at 07:16:26:
Justin,
The procedure of buying a HUD home is relatively easy, I would recommend finding a realtor (must be registered to submit HUD bids / requires brokers federal tax ID or Social Security #) who works with investors to submit your bids. I would offer the realtor a flat fee of $500.00 to submit your bids, otherwise they will be able to earn a brokers fee/commision (can’t recall exact percent) of the purchase price, which will reduce your net to HUD. I have done this on two occasions and it improved my position against other individuals whom were bidding also.
Keep in mind a realtor with a conventional mind set may not understand the flat fee commission thing, and may command getting their full brokers fee/commission, the only problem with this, is they may not get a commision at all, if you are not the successful bidder.
Remember to do your due diligence on the numbers as well, if your plan is to buy, rehab and sell, make sure you think you’re getting enough of a discount to make it worth your while, a lot of HUD homes sell for close to FMV, each case is different, usually homes in need of repair are the easiest to get for the investor (owner occupants usually pass). I also question who appraises these homes?
Just remember to buy a HUD home, you will need to have access to some funds, whether that be cash, conventional financing, hard money, and will have to put down earnest money of $500 to $1,000 depending on the purchase price amount.
Good Luck
Pat IN