more hud questions -- how to bid? - Posted by Ken

Real Estate Investing
#1

Posted by David Krulac on February 05, 2002 at 21:37:16:

first of all IMHO its not FMV that HUD lists its properties. I recently saw one of the HUD apprasials and I was shocked to see a comp with less than 50% of the square footage! IMHO that was not a comp.

Most of the time the HUD prices are high, IMHO higher than FMV given the condition. Sometimes the HUD price is too low, which very seldomly escapes many bidders who overbid the property more than HUD’s asking price.
The prices are all over the map but generally too high.

As far as accepted offers, there al over the map too. My recommendation is NEVER bid more than your personal comfort level for that specific property. If the offer is accepted good for you. If not then so be it.

David Krulac

#2

more hud questions – how to bid? - Posted by Ken

Posted by Ken on February 03, 2002 at 20:02:11:

Thanks for all the advice, everyone. Can you tell me what’s needed to bid on a hud property? Specifically, I understand you need a letter from the bank before bidding, but how do you get that? I know it’s a vague question – how do you get into hud properties as an investor, with good credit but putting out minimal cash?

Thanks again,
Ken

#3

Re: more hud questions – how to bid? - Posted by Kristine-CA

Posted by Kristine-CA on February 04, 2002 at 16:10:36:

Ken: I’ve bid on HUD properties (never been the winning bidder); I’ve never needed a letter from the bank. As far as I know, all you need do is deposit whatever is required in your area (somewhere between 1-3K) when you make your offer with an agent. The agents I’ve worked with just hold the check and then can either deposit it if I am the winning bidder or return to me if I am not.

Since you will have to make the offer through an agent, just call them and ask what you need to do.

Good luck. Sincerely, Kristine

#4

Re: more hud questions – how to bid? - Posted by Wm-pa

Posted by Wm-pa on February 03, 2002 at 21:54:47:

I first contacted real estate office to get a realitor who was familiar with the process. You need a real estate broker to make the bids for you.
1- Got my bank where my savings, and checking accounts are at, to give me a letter showing the balances of each. I guess this is to let HUD know that once you put the bid in and if you win you will have the funds available to purchase the property.
2- As investor I had to wait 5 days for newly listed properties(homeowers got first bids) after that it was open bidding. In Pa. I had to put up a $500 good faith deposit on the property I was bidding on. If I did not win the bid the $500 was returned to me, if they accepted my bid the $500 was a down payment with the balance due in 45 days. In Pa you had to put up $500 on each property you bid on. So beware if you bid on more than 1 property at a time and if more than 1 of your bids are accepted you as an invester must actually purchase the property in 45 days or lose the earnest money($500) on each property you fail to buy!
Be advised… if you fail to close within the deadline you will have to file for an extension that costs $250 and is not refundable. And then the extension was only good for 10 days. After that if you fail to close I was informed by HUD that I will lose the property and also the $500 earnest money and the property would be relisted.
To get in a HUD home with little cash??? I was told by HUD that your bid if accepted is what HUD will expect to be paid in full at closing. The real estates commission is paid by hud along with all outstanding property taxes and utility liens, and all other liens. Make sure you keep all paperwork from the closing especially the settlment sheet from the title company. In Philadelphia Pa I had to have proof that the Utilities and taxes were paid or I would not be allowed to have the utilities turned on.
And the most importat thing that I did not do…pay a house inspector to look at the house BEFORE you bid. It could save you alot of headaches and cash. I didn’t and the difference between what I estimated the rehab to cost and what the contractors estimated the cost were Very different. Needless to say I paid much more for the HUD home than I should have. Knowledge is expensive!
Good luck.
P.S. visit the HUD website at…www.hud.org
all of your questions will be answered and also you can search for HUD properties in any area you choose.

#5

Re: more hud questions – how to bid? - Posted by David Krulac

Posted by David Krulac on February 04, 2002 at 16:36:54:

Kristine,

For the HUD properties mnaged by golden feather of sacramento, cash buyers need a letter or bank statement showing sufficient assets to satisfy the bid and closing costs. For buyers who will be getting a mortgage you need a pre-qualifying letter from a bank/mortgage company before bidding. It used to be lots easier. I have been bidding and getting HUD/VA houses for about 20 years.

David Krulac
Central Pennsylvania

#6

Re: more hud questions – how to bid? - Posted by Terence

Posted by Terence on February 04, 2002 at 11:32:41:

Have anyone use www.homesdirect.com? It is an ebay company which list hub properties.

Also, somebody told me that HUB is always over price. Is it true?

#7

Re: more hud questions – how to bid? - Posted by Joe M.

Posted by Joe M. on February 05, 2002 at 03:44:48:

David, What type of % off FMV Do you average buying at hud auctions?
thanks, JOE

#8

Re: more hud questions – how to bid? - Posted by Wm-pa

Posted by Wm-pa on February 04, 2002 at 14:03:43:

I get their list of properties every week. Just to see what is avail. It seems to me from reading other people’s experiences with HUD(not hub)that it is a hit or miss kind of thing. Some of HUD’s prices are rediculous for the property while some are good. You just have to search for the good ones which appear to be far and few in between
Just my opinion.
Wm-pa