HUD Home - Owner Purchase (not developer)

[savory]

Hi,

Time is short for this question. Does anyone have experience and could provide some times on a HUD home purchase. Most people know that HUD has a bidding process for homes which seems to encourage developers. But, before homes go on the auction block, they are offered to homeowners who commit to live in the house for at least a year. This is where we are now. If we bid, we needs to be submitted on Friday, the 29th.

The house, for many people, is located in the most desirable neighborhood in our town. It is in fairly good shape but will require perhaps another $50K+ to get it back to a home of its character. Perhaps 1/2 amount to make it livable. Given the asking price, a $50K investment would offer room for a nice profit, using today's market conditions as a guide.

My question is do you have any experience with a HUD bid, especially owner purchase? Anything we may need to be aware? Any knowledge of the bidding process, especially in terms of strategy, etc.

As always, thanks for taking the time to provide your suggestions. Also, feel free to ask questions.

 

[RunningBum]

My understanding is that they would prefer owner occupied rather than a RE investor. I bought a HUD foreclosure and my realtor played up that I was buying it for my son to live in rather than flip it or rent it out. My bid was accepted. I'm told it's a hard game to figure out, but my plan if the bid was rejected was to either move on to another property, or submit a lower bid.

 

[savory]

My understanding is that they would prefer owner occupied rather than a RE investor. I bought a HUD foreclosure and my realtor played up that I was buying it for my son to live in rather than flip it or rent it out. My bid was accepted. I'm told it's a hard game to figure out, but my plan if the bid was rejected was to either move on to another property, or submit a lower bid.

I am a little confused. My understanding is that all bids for this property will be opened at the same time , on the specified date. I assume if any meet the minimum financial criteria, it will be accepted. If bids are not made or rejected, the property will go to auction where anyone can bid but property developers seem to be the ones who are more in the know of the auction program.

My confusion is how would you submit a lower bid if your bid was rejected? Perhaps you were in the auction vs the 'owner occupied' first stage program for HUD. Also, did you bid over/under the asking price? For whatever strategy you selected for the bid, can you share your rationale?

thanks

 

[RunningBum]

My understanding, as explained by my realtor, is that the HUD rep or reps have the power to accept an offer, or reject all and put it up for bid again. There was a deadline that you had to have bids in. If they didn't get any acceptable bids, in their opinion, they could reject all and put it back up for offers.


At that point my other offer had expired, and I was free to make another one. It could be higher, lower, or the same. I had heard stories of people lowering their bids and finally the HUD rep gave up and let it go.


I don't know how abnormal this is. We had a limited time to do something, so I made a reasonable competitive offer, and it was accepted. So I don't have any personal experience with multiple rounds, just what my realtor was telling me and other internet searches. I probably asked here and got some knowledge. Could be I am wrong.

 

[Jerry1]

We bought one for my daughter. As stated, it was at the stage that required an owner occupant. We put in a cash offer and it was accepted. We put another $30K into the house and my daughter moved in. We have about 50% equity increase now that houses have rebounded.

To OP, I'm sorry, but I cannot offer you any meaningful advice. We were struggling to find my daughter a house. We were seeing all kinds of deals, but since we did not know the foreclosure/HUD world, we were getting no where. We were so naïve that we thought we'd get a home using conventional financing. Then we came across a person (friend of a friend), that knew what the hell he was doing and everything changed. It was funny, we were still thinking financing and then one day I casually said that I could pay cash. We were in the middle of a deal and he stopped it and said "if you can pay cash, I can get you a better house". It took a bit longer because we had to regroup, but he came through and so did the deal. Bottom line is that it's a different market and you need to know what you're doing to get anywhere. Somehow, this guy had a sense of how much to bid, the value of cash, understood the process and he pulled this off. Wish I could tell you how, but if you could find someone local (call a realtor and ask for a referral?) who knows this market, you'll be glad you did. I can tell you one thing, if it's a nice house in a nice neighborhood and only needs $50K to make it livable and build equity, it will go in the first round. All the good ones we saw did. The ones that were around after the first round were things that professionals were better off dealing with.

 

[brucethebroker]

I have not bought, or represented a client bidding on a HUD for about 3 years. BUT, in the past, OO (owner occ) bids were opened first (after about 10 days), and the property was returned to the public if no acceptable bids were made. HUD could also counter your OO bid if it was a little lower than they wanted.

My advice to clients is to bid the maximum you are willing to pay for that house in that condition and still feel like you are getting a deal. Many homes are lost over a $1,000 or so low bid, and most buyers would have paid that gladly if it meant getting their home.

BTW, in today's market, not ALL repos are great deals. Many "regular" sellers are under pressure to sell (divorce, estate, financial problems) and actually offer better prices and/or terms than repos do.

 

[savory]

I have not bought, or represented a client bidding on a HUD for about 3 years. BUT, in the past, OO (owner occ) bids were opened first (after about 10 days), and the property was returned to the public if no acceptable bids were made. HUD could also counter your OO bid if it was a little lower than they wanted.

My advice to clients is to bid the maximum you are willing to pay for that house in that condition and still feel like you are getting a deal. Many homes are lost over a $1,000 or so low bid, and most buyers would have paid that gladly if it meant getting their home.

BTW, in today's market, not ALL repos are great deals. Many "regular" sellers are under pressure to sell (divorce, estate, financial problems) and actually offer better prices and/or terms than repos do.

Thanks! We are moving along in the strategic direction you are suggesting for the bid.

One thing we tried to do last night was gauge the interest in the house by comparing views/saves on the various house hunting sites (Trulia, Zillow, Redfin). Is that something you (others reading this) might be familiar as a measure of interest? Or, have you found there is no relationship between those numbers and interest in the house?

Also, Redfin says it is a 'hot home' with a 70% chance that it will sell in the next two weeks Does anyone know if this has proven to be an accurate assessment of the market?

Thanks again for all of the replies.