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Help With HUD Offer

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J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 18 '11, 11:00 AM


Hey folks,

I submitted an offer on a HUD property the other day (through HUDHomeStore.com). I've bid on HUD properties before, but have never had one accepted or countered.

I checked today, and it appears that my offer was countered at just a few hundred dollars above my offer price. I'd like to accept the counter-offer, but apparently it doesn't work that way with HUD (there is no "ACCEPT" button anywhere or any other obvious way to accept the counter-offer).

There *IS* a way for me to resubmitted a new bid right from the counter-offer page.

My guess is that it's not a true counter-offer whereby I have the option of accepting and locking up the property. Instead, it seems more like HUD is just informing me that the minimum they would consider is the counter-offer price and that by resubmitting after I got the counter-offer, my new offer is just going back into a pool of potential offers that HUD may be receiving today. In other words, even though my new bid is above the counter-offer price, the property could still go to someone else.

Does anyone here have any insight to how this actually works? Just curious so I know what to expect from here (and in the future)...

Thanks!



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


John C

Real Estate Investor from SouthCentral, Iowa

Jul 18 '11, 11:15 AM
1 vote


I recently bought a hud property.. in Iowa a hud registered agent is required and the bid is for net price.. I had to pay costs and commissions on top of that. Me there are title issues we are resolving...



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 18 '11, 11:18 AM


Hey John,

Yup, I'm a HUD registered agent, and the counter-offer I was willing/trying to accept was a net bid...

After doing a bit more research, it appears that a "counter-offer" from HUD is pretty meaningless...it seems they may have made counter-offers to multiple bidders, not just me...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Mark Yuschak

Real Estate Investor from Grand Blanc, Michigan

Jul 18 '11, 11:45 AM
2 votes


J, you're exactly right in your assumptions of how the HUD counter-bid process works. Theire counter offer really is not what we would consider a conventional counter offer. They're just informing you of what the minimum net is that they'll accept. If you want to "accept" their counter, you'll have to submit a whole new bid which meets their minimum.

I've dealt with this multiple times from HUD. And, I've also delayed resubmitting a bid which would meet their minimum net amount and missed out on the house. So, get your bid back in immediately if you really do want the property.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 18 '11, 12:34 PM


Thanks Mark,

Got my counter-bid back in immediately, but I assume that I still may be facing competition on this one... (it's one of the better HUD deals I've ever seen in my area)...

Appreciate the info!!!



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Jim Stardust

Real Estate Investor from Cincinnati, Ohio

Jul 18 '11, 01:40 PM
1 vote


J Scott, keep us updated on what happens with your recent offer, whether it gets accepted, rejected, and even if you don't hear back? I'm trying to figure out how HUD establishes a minimum bid and what strategies investors/buyers employ to win some of these auctions? I was told by an agent that the accepted bid on a property I expressed interest in, was actually higher than the list price and she said that happens pretty often!?! I don't know if she's misinformed or just didn't want to bother with this particular transaction.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 18 '11, 01:45 PM


Jim,

On the last HUD property we offered on, the counter-offer would have netted HUD exactly 20% less than the list price.

I assumed that was a standard minimum, but on this one, the numbers work out as follows:

- List Price: $60K
- My First Bid: $55K (with net of $51,600 to HUD)
- Counter from HUD: Net of $52,200
- My Second Bid: $56,500 (with net of $53,100 to HUD)

So, they apparently countered at 12.5% less than list on this one. Which means that 20% wasn't standard.

My new bid is sealed until midnight tonight, at which point it will be compared against anything else they have. If they don't have anything else (or if mine is the highest), I assume I'll get it since it's above the counter-offer price.

But, those are big "ifs"...

I'll update this thread tomorrow with the result...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Chris Calabrese

Rehabber from Mt. Pleasant, South Carolina

Jul 18 '11, 06:59 PM
1 vote


Originally posted by J Scott:
Jim,

On the last HUD property we offered on, the counter-offer would have netted HUD exactly 20% less than the list price.

J Scott, I've had this happen several times as well, at exactly 20% under asking. I think it may vary based on the DOM, and it sounds like this property was newly listed. I think they generally get a lot of bids, so they let everyone resubmit instead of truly countering.

Occassionally I see a HUD house sell extremely low (~50% of asking), but it is usually after 90+ DOM. Compared to a lot of banks, they seem to like to get rid of homes fast.

Good luck with the bid. I'm going thru my first HUD purchase right now, and it's obvious that it's run by the federal government!

-Chris



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jul 19 '11, 01:10 PM


Update...

According to the HUD website, my bid was accepted earlier today. But, I still haven't received an email confirmation or the contract package, and until I receive that, I'm not getting my hopes up...

For anyone who's been through this process -- how long does it generally take to get the email acceptance from HUD after it appears on their website? :D



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Steve Gee

Real Estate Investor from Loganville, Georgia

Aug 04 '11, 09:10 AM


Originally posted by J Scott:
Update...

According to the HUD website, my bid was accepted earlier today. But, I still haven't received an email confirmation or the contract package, and until I receive that, I'm not getting my hopes up...

For anyone who's been through this process -- how long does it generally take to get the email acceptance from HUD after it appears on their website? :D

I'm just curious how this ended up.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Aug 04 '11, 01:23 PM
2 votes


The HUD site basically said, "If your bid is accepted, you have 48 hours to get us the paperwork or we'll cancel the bid."

After two days of not hearing anything, I drove to the representing attorney's office that was listed on the HUD site (they are just a few minutes from my home). The woman at the desk said, "Oh, the 48 hours starts when you get the package from us by email...and we're backed up a couple days." I literally received the email from HUD as I was walking out the door. That was a Thursday and I was told I had until Monday to get the paperwork in.

I submitted the paperwork Thursday afternoon. On Friday afternoon, I received an email with a list of errors on the paperwork (a couple things that I should have gotten correct and a couple things that I couldn't have known without some guidance from HUD). Over the weekend, I made the corrections, and drove the paperwork to the office on Monday.

I was basically told, "If the paperwork isn't right this time, your bid will get canceled." Two days later, I got a "Welcome Packet" from HUD with a copy of the ratified contract.

Apparently, that welcome letter is triggered by the pre-closer beginning the title work (which was late last week). I've been told that once the title work is completed, I'll get a phone call to schedule the closing.

Hopefully I'll get that call next week and close the following week...I'll post an update then...

Btw, all-in-all, I think the HUD process is very reasonable, ONCE YOU UNDERSTAND IT. But, unfortunately, it's not documented very well anywhere on their site, so the first time through this process is ridiculous...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


Steve Gee

Real Estate Investor from Loganville, Georgia

Aug 04 '11, 04:23 PM


Fantastic, or at least it sounds that way. My wife and I just got an accepted bid from HUD, our first after about a dozen declines. We've got a renter in line already, just waiting for us to close and do some fairly minor repair.

I am now awaiting the letters/emails saying something was not submitted correctly or there is a title problem.

I notice you're in Atlanta. My wife and I are in metro Atlanta as well.

What I like about this forum is that y'all have already answered at least 2 questions that the agent my wife liked couldn't answer: Why was the house sold just a few months ago for about 3 times what we are getting it for and what exactly does a "counter offer" from HUD really mean?

Anyway, good luck with your house and maybe some day we'll meet up in search of our next investment.

Steve



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