Real Estate Investor · Portland, ME · Member since 2011 · 6 posts · 0 votes
I've never purchased a HUD owned home before but there is one I may be interested -- not anywhere near the current list price though. It's a UI property in the Extended listing period. The price at which it would be attractive to me would be about 60% of the current list price or about 50% of what is listed for the "as-is" price.
If nobody submits a successful bid, is the property likely to be re-listed at a lower price?
Also, I noticed the time between the "List Date" and the "Period Deadline" is 116 days. Isn't the Extended listing period supposed to be 180 days? Any thoughts as to why the discrepancy?
In my experience, list prices will be dropped every couple weeks until the property is sold -- the longer the property is listed, the shorter the period between price drops.
In general, I've never seen HUD accept a price less than 20% below list, and that 20% below is the net amount to HUD, not the gross amount. As an example, if the list price is $100K, generally after a few weeks of not selling, HUD will be willing to accept 80%, or $80,000 as their net proceeds. With 6% paid in commissions, that means HUD won't accept anything lower than $85,106 (which would result in $80,000 to HUD after commissions). If you're asking for closing costs, add that to the equation as well.
For newly listed properties, HUD generally won't accept less than 10% or 15% below list, again net to HUD.
I've bought HUD UI properties before. My suggestion is to put in your best price and have the broker keep the bid "open" when they reject it. I believe you (actually your broker) just check the "hold offer as backup" radio button on line 10 of the submission your broker will place. UI means you can't finance this purchase, so you'll need cash POF when they take your offer. The process changed for most of the country in late 2010/early 2011, and there is no longer the concept of a "broadband broker". HUD may counter offer you. You do not have to accept. If your offer remains "open", they may come back in 3 or 4 weeks and accept your low offer. That happened to me about 6 weeks ago. SO it can happen.
Extended listings are 30 days after initial listing, BTW.
Thank you for your suggestion. I plan to find an agent who can show me the place and will likely make what will wind up being a seriously low-ball offer compared to HUD's numbers.
Do you know what happens with properties in the extended listing period once the "Period Deadline" is met? Do they start another 180 day Extended period at the same list price or do they adjust the list price?
In my experience, list prices will be dropped every couple weeks until the property is sold -- the longer the property is listed, the shorter the period between price drops.
In general, I've never seen HUD accept a price less than 20% below list, and that 20% below is the net amount to HUD, not the gross amount. As an example, if the list price is $100K, generally after a few weeks of not selling, HUD will be willing to accept 80%, or $80,000 as their net proceeds. With 6% paid in commissions, that means HUD won't accept anything lower than $85,106 (which would result in $80,000 to HUD after commissions). If you're asking for closing costs, add that to the equation as well.
For newly listed properties, HUD generally won't accept less than 10% or 15% below list, again net to HUD.
Under the old regime, and it seems to be true of the new regime, UI properties behave a little differently than IN or IE property. For IE and IN, I agree with J Scott.
Here's what I would do. Put in the low offer as an "open" offer. They will reject. Than wait for several weeks. Watch the status line and see if it says "Availability of home is subject to the Asset Manager accepting a bid from an earlier bid period or removing the home from the market." If so, it's a waiting game. They may reprice with a sizeable List Price reduction (on the last HUD property I bought it was 28%) to get their final bids before taking yours. My contract price was over 18% below the last revised List Price.
Thanks for the info, all. The property currently has "Availability of home is subject to the Asset Manager accepting a bid from an earlier bid period or removing the home from the market." in the listing -- as Chris mentioned above. I've looked around online and can't figure out exactly what this means. Any input?
Most likely: Someone threw in a low ball offer that they don't want to accept but will if they don't get a better price. That seems to be what's going on here at least.
Unfortunately, the new HUD regime no longer publishes bid statistics and bid histories. The current system doesn't have the transparency like the prior Broadband Broker listed properties had. So I can't tell definitively how long properties stay in the "...subject to the Asset Manager accepting a bid..." state. I don't have scrapers written for the new HUDHomeStore site (and I don't plan to), but from what I've seen, property seems to stay in that state for 2 to 3 weeks.
Hi, I am in a simular situation. I placed an offer ABOVE the listing price in cash, and HUD did not accept. HUD actually extended the bid. I believe HUD is holding out for higher bids. Can Hud do that? I thought if many offered above listing, HUD would accept the highest bid or the next few down the line above listing. I feel like reporting HUD but need advice.
Just so everyone understands, HUD only cares about the NET amount. Cash or closing fast means nothing to HUD.
I have bought several HUD properties with cash but have learned that it does not speed or increase likely hood of winning a bid.
Look at sites like www.hudhomestore.com
One more thing, if you offer above the listing and use a mortgage then you will need to bring the difference between list/appraisal and offer amount in cash to closing, so be careful.