@Mark Ferguson - Mark, I hope you can answer a couple of questions relating to HUD homes.
Background first - I had made an offer on a HUD house and they were emailing me pretty much daily with their counter-offers. Also, I got emails when they did a price drop. It eventually got down to a list price of 51,200, and their counter-offers in their emails to me was around 35,800 net to HUD (right at 70%). I wanted it for less, so I put in a lower bid than their counter-offer which was not accepted. But they kept on emailing me with this same counter-offer that they wanted at 35,800. Well, all of a sudden it went under contract, without me receiving any indication of a price drop or a lower counter-offer. I eventually found out that it went under contract for 32,400 (obviously less than the counter-offer that they had sent to me repeatedly). So, here's my questions (below):
1. My guess is that this one was on the verge of getting another price drop (probably a typical 10% drop), which would have put the new list price at 46,000. And their accepted offer of 32,400 (net-to-HUD) is right at 70%. But I never got an email telling me of the price drop. Is it possible that the other buyer just so happened to have put in their offer the day before the price drop and HUD accepted it without ever advertising the price drop? In other words, if HUD is countering at 70% and I make an offer on Wednesday that is less than their counter-offer, but they are already planning a price drop on Thursday, is it possible that I might then get the deal without them ever even posting the price drop? (Hope you can follow my reasoning here).
2. The eventual buyer was working with the listing agent. Question: Does the listing agent know about any upcoming price drops before they are posted on Hudhomestore? For example, in my area price drops are usually posted (and emailed) at about 12:30 a.m. So, if I put in an offer at 12:31 a.m., my offer isn't opened until the following day (along with those of all the other investors who hit it on the day of the price drop). But on the other hand, if I had put my offer in at 11:00 p.m. the day before, then maybe I would get the deal without the price drop ever even being published? Does this make sense?
sometimes I am notified of the price drop the day before. I have to wait until the next day to change mls. How much was your bid? It is possible that bid was in the system before you bid or after you bid and they accepted it when the price dropped because it was higher than yours and now met the minimum they would accept.
Also, if they were doing a price drop and the agent told his buyer about it, the price still should have been dropped in HUD home store and on mls. The price would have dropped at midnight on the site and then they would have opened the bid from the previous day the next morning. This makes me think that bid was already in the system and not submitted the day before.
Yes, my bid was lower than theirs. But you just answered a key question for me. It seems that the listing agent (and his/her buyers) may have a one-day advantage over others when it comes to making offers on price drops. I will keep this in mind for the future. There's a huge difference between making an offer at 11:59 p.m. and 12:01 a.m. These two bids go in only 2 minutes apart, but the latter is opened 24 hours later than the first (and it may not be opened at all if the first one meets HUD's net requirements). Not entirely fair, but at least I now know how the system works. Basically, I need to be putting my offer in every single day in anticipation of a price drop.
@Mark Ferguson - Your second reply above leads me to think that HUD may sometimes actually accept a bid that is lower than their counter-offer. Still, the lesson that I have learned is to submit my bid every day, even if it's lower than their counter-offer.
from my understanding HUD will look at previous bids submitted when they do a price drop. If that bid was submitted two months ago they may have accepted today when they did the price drop. Since it was higher than yours they accept that bid no matter when they were received. That is why they accept backup bids when a contract falls apart. Backup bids are accepted all the time without the house going back on the market.
If you had submitted your bid the day before you would have still lost out because the other bid was higher.
Thanks for the explanation. That makes sense. I was beginning to think that this "back-up bid" stuff was a bunch of crap, cause I've never had one of mine accepted as a back-up (even though I always indicate that they can hold mine as a back-up). Still, I think that I have learned a lesson which is - go ahead and make the offer even if it's less than their counter-offer. And it really won't hurt to put it in every day.
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