HUD Properties - bidding - Posted by Trevor

Posted by Redline on July 03, 2002 at 18:14:37:

As for that occupancy thing, I’ve heard from several people that they DO follow up and check on this. Don’t know 100% if that’s true, but I believe it.


HUD Properties - bidding - Posted by Trevor

Posted by Trevor on July 02, 2002 at 16:34:21:

Just a quick question. How do you go about bidding on HUD properties for sale. Is there a minimum bid that must be placed or can you go as low as you want and then up the bid from there? Any insight into how this works or how to get started would help. Thanks.

Re: HUD Properties - bidding - Posted by Matt (MPD)

Posted by Matt (MPD) on July 03, 2002 at 04:42:15:

just about all the information you’ve already gotten on this subject is very good and accurate.

I would like to add the following:

Here in Elgin, IL we have seen HUD homes selling typically for about 5-15% over asking price when auctioned. DON’T get suckered into it thinking you’re getting a bargain unless you know for a fact that you are. Many real estate agents here in my town are pushing HUD homes as bargain prices when indeed the asking price is FMV for properties in good condition with ample market exposure. It’s the “illusion of a bargain” as one auctioneer friend once said to me. Much like the close-out racks at some of the more famous XXMart stores.

Also here, Golden Feather has recently begun leaving all of the utilities on so that prospective purchasers can have a chance to inspect the major mechanicals (save the water because in most cases they get winterized). Have an inspector friend (or other qualified individual) accompany you to the property in question to check out everything you can. As it has already been mentioned you do not get a chance to renegotiate with HUD after they’ve accepted your bid and if you back out of the contract (especially as an investor now) you will lose your earnest money deposit (1,000) unpon cancelling the transaction.

HUD properties, like it’s been said, may have a deal now and again, but for every HUD property we DO purchase about 100 or more go by as not worth the effort.

Be prudent and cautious.

Matt Yohnk
MPD Investments Inc.

Re: HUD Properties - bidding - Posted by Tjent

Posted by Tjent on July 02, 2002 at 23:49:11:

Go to the GOLDEN FEATHER website. This is the designated brokerage in many states, possibly nationally, designated to sell HUD homes. The site lists properties for sale along with the “appraised value” or asking price. There is no official minimum bid; however, I’ve heard it on pretty good authority that there is an undisclosed cut-off, below which they automatically reject the bid. I think it may be 10% below the “appraised Price.” For emample, suppose a property is listed for $100,000, any bid less than $90,00 is automatically rejected, even if its the only bid. But if a property does not sell within a certain time period, the price is automatically lowered. It can be lowered several times before selling. This is important to know because HUD properties for whatever reason are often OVERPRICED, especially for the risk you’re taking. There are not a lot of deals there, though there are some. The funny thing is that the price it eventually sells at mey be much less than 10% below the initial asking price, and, using the above example again, if someone offered $89,000 when it was first listed they would have been rejected, then it might end up selling for 70,000 after price reductions. There’s no negotiating, no deal-making, and no common sense; for HUD and Goldenfeather it’s all a mechanical (bureaucratic) process.

as i said before… - Posted by David Krulac

Posted by David Krulac on July 02, 2002 at 20:29:05:

Posted by David Krulac on July 02, 2002 at 09:54:26:

In Reply to: HUD Properties posted by M. Farley on July 02, 2002 at 08:01:52:

#1 the utilities are off and you can’t test any of the mechanical systems, electrical, plumbing and heating. In cold climates there is often freeze damage.

#2 owner occupant bidders get first crack for the first 10 days of bidding. Many of the better properties are not available to investors because they were sold to o/o in the first 10 days.

#3 DON"T even think of lying and saying you’re going to live there. The penalty is $250,000 fine and 5 years in jail.

#4 applies to all repos/reo/foreclosures, the former owner usually don’t take good care of the property in the last year or two of ownership, therfore there is a lot of deferred maintenance. also some are vandalized, and trashed. One repo we got had 40 yards dumpster of trash plus 12 pickup loads to be removed.

good luck, there are potential buys but there are pitfalls to be avoided also.

David Krulac

Central Pennsylvania

Re: HUD Properties - bidding - Posted by Dave T

Posted by Dave T on July 02, 2002 at 19:04:33:

HUD properties are usually sold in a sealed bid auction. You submit your bid through a HUD approved broker. All bids submitted during the bid period are considered as submitted simultaneously. At the end of the bid period, all bids are opened and the net sale proceeds to HUD are calculated. Bids that fail to meet or exceed HUD’s minimum bid are rejected. From all the remaining bids, the bid that results in the highest net to HUD is declared the winner.

If you are bidding as an owner occupant, you may participate in the bidding at any time. Investors must wait until the bidding is opened to investors before their bids will be accepted.

The broker that submits your bid will help you fill out the HUD mandated offer forms and all the attachments that go along with them. You must also have a lender’s preapproval letter and give the broker a minimum deposit.

As far as knowing what to bid, I suggest you figure out the maximum amount that you are willing to pay for the property and submit that as your bid. There is no negotiation process where you have an offer and counteroffer.

Additionally, you are participating in a multiple offer scenario. HUD (actually HUD’s marketing and management company) may receive several bids during the open bid period. At the end of the bid period, the highest acceptable bid wins the auction and all others are rejected.

I have given you a general overview of the process. Your HUD approved broker may have more details specific to the field office you are dealing with.