HUD Foreclosure anyone?

[Ramz-ee]

I found what looks like a great home for a great price. It's a HUD property with the homeowners/non-investor bidding ending later this week.

Has anyone been through this process?
Do people normally bid higher than asking?
How quick is closing?

Any comments/experiences would be greatly appreciated!

[sjh722]

I've done them for clients, I've never bought one for myself.

It depends on how desirable the property is. (I assume you are working with an agent? They have to be registered to place bids on the website.) Your agent can view past bid results and should be able to guide you on how to bid.

The HUD office we deal with does it this way: you place your bid. Within about 24-48 hours, bid results are available online. If you have the winning bid, your agent receives a bid packet which needs to be filled out and all re-signed with original signatures, then overnighted to the HUD office.

They are pretty reasonable about standard closing times, IIRC. I think they allow you 30-45 days from the time your offer is accepted, with a 15-day extension available as long as you submit supporting paperwork.

The only caveat: what type of financing are you doing? HUD absolutely will not allow anyone to make repairs to a property prior to closing. There are always a bunch of signs posted there warning you of this - so if you are trying to go FHA or something similar where there need to be GFCI outlets, can't be mold, etc, that's a no-go with HUD. You can de-winterize the property to inspect it, but you have to pay their contractor to de-winterize and re-winterize, and you cannot make repairs prior to closing, even at your expense. I had buyers once who had to cancel a contract because the appraiser flagged mold in the basement and their lender said mold was an absolute no-go unless it was fixed prior to closing; if they buyers tried to fix it without HUD's knowledge and got caught, they would have lost their earnest money and the house.

[Ramz-ee]

Thank you sjh!

[susieq]

We recently bought a HUD house as an investment property. Any $ you bid over the asking price you must pay for in cash as lenders will not lend over the appraised value. You can also ask for closing costs. However HUD awards the contract to the bid that lets them make the most money after everything is paid. So if you bid 100 and want 2% closing costs and someone else bids 99 and does not want any closing costs the 99 bid wins.
We also had to have a qualification letter from the lender that we send back along with the earnest money check and other paperwork.

[sjh722]

Feb 4, 2013 14:46:54 GMT -5 susieq said:

We recently bought a HUD house as an investment property. Any $ you bid over the asking price you must pay for in cash as lenders will not lend over the appraised value. You can also ask for closing costs. However HUD awards the contract to the bid that lets them make the most money after everything is paid. So if you bid 100 and want 2% closing costs and someone else bids 99 and does not want any closing costs the 99 bid wins.
We also had to have a qualification letter from the lender that we send back along with the earnest money check and other paperwork.

The HUD price isn't the appraised value. The value is determined by the appraisal (which may or may not be equal to your purchase price.)

Also, they will not allow more than 3% in credits, which can be a problem if you're trying to cover closing costs on a very low-priced house.

Sent from my ADR6350 using proboards

[susieq]

Feb 4, 2013 20:02:32 GMT -5 sjh722 said:

Feb 4, 2013 14:46:54 GMT -5 susieq said:

We recently bought a HUD house as an investment property. Any $ you bid over the asking price you must pay for in cash as lenders will not lend over the appraised value. You can also ask for closing costs. However HUD awards the contract to the bid that lets them make the most money after everything is paid. So if you bid 100 and want 2% closing costs and someone else bids 99 and does not want any closing costs the 99 bid wins.
We also had to have a qualification letter from the lender that we send back along with the earnest money check and other paperwork.

The HUD price isn't the appraised value. The value is determined by the appraisal (which may or may not be equal to your purchase price.)

Also, they will not allow more than 3% in credits, which can be a problem if you're trying to cover closing costs on a very low-priced house.

Sent from my ADR6350 using proboards

It may be different here but our bank would not take an appraisal over what HUD was asking.  They said the only reason the bank appraised it was to make sure it was not worth less than what HUD was asking.  And it might be because we were buying it as investment property.  Or we could have had a stupid banker! 

We did not do any credits getting the house was more important than the financial gain from a few % in closing costs.