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Cash offers on HUD foreclosures?

8 posts by 4 users

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Casey S.

Real Estate Investor from Texas

Mar 01 '12, 10:48 AM


Are they likely to accept less on a cash offer? Ive purchased some HUDs in the past but always dealt with financing. I hear a lot of foks say they will accept 85% of asking price pretty often. Would I be better to go in at 80% of asking price on a cash offer?

Thanks!



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 01 '12, 11:18 AM
1 vote


HUD bidding process follows set rules, and it all boils down to what will net more for HUD. A cash offer that nets $1 less to HUD will lose out to a financed offer that will net $1 more.

If you want to win HUD bids, focus on netting the most to HUD:

1. Higher offers
2. Lower closing costs
3. Lower commissions to selling agent



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


Casey S.

Real Estate Investor from Texas

Mar 01 '12, 11:34 AM


Thanks J Scott!

What can I do to effect #2 and #3?



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 01 '12, 11:49 AM


For #2, just ask for $0 in seller paid closing costs and just pay them yourself.

For #3, there's not a lot you can do unless you ask your agent to take a lower commission or you get your real estate license and can ask for $0 in commission.



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


Casey S.

Real Estate Investor from Texas

Mar 01 '12, 12:03 PM


Thats what I thought but wasnt sure if I could be missing something.

If I go with cash then closing cost really arent an issue.

My real estate agent works hard and helps with a lot of things that some agents wouldnt so I dont want to try to short her.

The house is a good deal at 85% so thats what Ill offer and stick to. Thanks!



Steve Babiak

Real Estate Investor from Audubon, Pennsylvania

Mar 01 '12, 01:15 PM


Originally posted by J Scott:
...

For #3, there's not a lot you can do unless you ask your agent to take a lower commission or you get your real estate license and can ask for $0 in commission.

I believe getting a real estate license is not sufficient, since you must also be registered with HUD to place bids on their properties.



Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Brian Levredge

Real Estate Investor from Chattanooga, Tennessee

Mar 01 '12, 01:54 PM


I guess it depends on the market. I have purchased at between 35%-40% below list on cash offers. These aren't war zone or even blue collar neighborhoods either. I'd say it also depends on how long a property has been on the market and if it has gone through several price revisions or not.

Something else to look at is whether repairs are insured through escrow or not. When they are insured, FHA has money set aside for repairs that can be rolled into the loan. Non insured properties don't have that set aside in escrow, meaning the buyer has to come up with the money themselves to make the repairs. This eliminates quite a bit of the pool of buyers.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Mar 01 '12, 02:11 PM


Originally posted by Steve Babiak:
Originally posted by J Scott:
...

For #3, there's not a lot you can do unless you ask your agent to take a lower commission or you get your real estate license and can ask for $0 in commission.

I believe getting a real estate license is not sufficient, since you must also be registered with HUD to place bids on their properties.

Good point, Steve...

With my brokerage, I'm automatically registered to bid on HUD properties (just needed to sign up on the HUD website), so I guess I haven't ever thought about the fact that some agents need to go through a process.



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


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