Posted by Rob FL on November 18, 1998 at 21:10:16:
I can’t speak for the rest of the country, but for HUD’s Orlando office this is how it works.
When HUD aquires a house, it first gets offered to owner occupants. If no-takers the second offer is to government agencies, not-for-profit corps, and police officers. If still no-takers, third round is to the general public (i.e. us real estate investors). If still no-takers then it goes on an extended list of unsold properties and remains there until it is sold. Occasionally if it sits for long then they will lower the price.
But the big rule is that for non-owner occupants that the minimum bid is 87% of HUD’s asking price. So on a $50,000 asking price, the lowest bid you could make is $43,500 (that is net to HUD which means that HUD would get 43,500–assuming that there are no closing costs paid by HUD and no Realtor’s commissions). So in other words a bid of only $500 would be rejected automatically upon receipt.
The federal government may pay $500 for a hammer but they won’t just give their houses away.