BiggerPockets

OK guys, I just got a nice lesson in the school of hard knocks. Paid the tuition for it too. Passing my lessons on to you. Maybe you won't be as stupid as I am.

Made a bid on a MH and acre. HUD foreclosure. Contract had 15 days for inspection. HUD accepted contract.

Inspection turned up copper conduit from meter base to house gone and A/C system striped. Massive water leaks. By the looks of things I speculate a neighbor did the damage and would do it again if repaired.

I cancelled contract easily within 15 days. I have waited a little while for return of earnest money.

Found out today that there was a clause that allows HUD to retain 100% of earnest money from investors seeking uninsured sales and 50% of earnest money seeking insured sales.

So, I lost 100% of my earnest money. My seller agent had not heard of this. The HUD listing agent had not heard of this. I don't know if this is new but I will scan it and post a copy in the FilePlace under the name "HUD doc" so you can see it for yourself.

Some days it doesn't pay to get out of bed. :wink:

Hey Greg,

I just got my first HUD bid accepted this week, and found this out just a few hours before I turned in all my contract paperwork. I was quite surprised as well...especially given that it wasn't directly stated in the contract (from my reading of it).

This is typically what HUD does with investor purchases. The question I have is how to they know? Your agent should have known this up front. Are you aware that HUD will extend your purchasing deadline 15 days at $25/day? Herbster
PS I bet your agent fills out an investor purchase agreement.

Are you guys even reading the documents put in front of you? A standard hud contract (which if you don't fill out perfectly gets kicked back) clearly states this.

a month ago I had a house acquire a new roof leak after i put a contract in play...they kept my deposit since i pulled out (since the house was newly damaged). They don't care.

Btw for those of you trying to wholesale huds, get your title company (best to use a 3rd party) to do a title search BEFORE you start working hard on the property, half of the property i get from hud has some sort of title flaw that needs to be resolved, maybe 20% of them I can't fix.

The bottom line is the rules changed in many areas/states.
See also this BP post, specifically the post by Mark Yuschak about the 'big picture'. "...The goal is to get all management companies to have bids submitted through hudhomestore.com for all 50 states." I've bought multiple properties with HMBI and MCB, now two with the "new" system. As of right now, it seems like HUD sales are about as uniform (state to state) as they have ever been.

Thanks guys. No need to blame anyone but myself. Today is a new day. I'll make the loss up on the next deal or two. Minor setback, major lesson. Good luck to all.