Shelton, CT · Member since 2015 · 14 posts · 1 vote
I am a real estate agent interested in purchasing a HUD 3 family home as an investment property for myself and husband. There is a broker listed for the property. If I bid on the property does it go right to the listing broker anyway or is there a way I can bid and potentially save money as a real estate agent not taking a commission. Thank you for any feedback.
What Brandon said. HUD has strict rules about agents bidding on properties for themselves. Be certain you are not breaking any of them before you bid. This includes not buying an owner occupant property as an investor(a felony).
As for your commission, you can't reduce it because you can not bid on this property for yourself, even if there were a way to reduce commissions in a hud sale.
At any rate, a HUD sale is different from a normal purchase in that there is no one sitting there making an emotional decision based on things like "oh look this agent is reducing their commission so let's pick that offer instead." It is based purely on a math calculation. Highest bid above the reserve price is selected
Several things are incorrect in your post. As a Broker, I have purchased 200+ HUD Homes over the last 20 years and it represents approximately 90 % of my flip inventory
As a agent bidding on a HUD property , the restrictions are no different than any other purchaser with the exeption of agents working for the Listing Broker are prohibited for bidding on homes for themselves
You can absolutely reduce and even forfeit your commission by placing $0 in the buyer's agent commission field. Placing $0 for an agent is more beneficial than collecting the commission and paying taxes on the property. Since the net to HUD is the only thing that matters to HUD, I can buy the property for 3% cheaper than a non agent. For example :
$100,000 Bid
$6000 Commissions (3% to listing and selling Agent)
$94000 Net to HUD
97000 My HUD Bid
$2910 Listing Agent Comm
$94,090 Net to HUD and I win by $90
If you work under a Broker, forfeiting your commission is subject to what is allowable in your agreement with your Broker
Real Estate Investor · Colorado Springs, CO · Member since 2009 · 25 posts · 4 votes
11y
Wayne is correct, the HUD offer will show the "Net to seller", and that is what they look at. If this is your first HUD offer, you will need your managing broker's NAID number in order to submit an offer.
Investor · South Louisiana, LA · Member since 2014 · 17 posts · 3 votes
11y
You as a realtor can Purchase a HUD property as long as your Broker is not a HUD listing broker (BLB )nor any agent in your office lists HUD homes. You as selling agent can waive your commission, however the listing broker gets paid no matter what. You should check with your broker about waiving your commission, a lot of brokers won't let their agents waive their commission and your broker must be registered to sell HUD (NAIDs number)for you to be a selling agent.
Residential Real Estate Agent · San antonio, TX · Member since 2013 · 130 posts · 44 votes
11y
What Brandon said. HUD has strict rules about agents bidding on properties for themselves. Be certain you are not breaking any of them before you bid. This includes not buying an owner occupant property as an investor(a felony).
As for your commission, you can't reduce it because you can not bid on this property for yourself, even if there were a way to reduce commissions in a hud sale.
At any rate, a HUD sale is different from a normal purchase in that there is no one sitting there making an emotional decision based on things like "oh look this agent is reducing their commission so let's pick that offer instead." It is based purely on a math calculation. Highest bid above the reserve price is selected.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
11y
@P. Martin Not exactly.. HUD looks only at the Net, after commissions and seller concessions are calculated....but yes, purely an unemotional math calculation.
Jacksonville, FL · Member since 2015 · 183 posts · 22 votes
11y
Originally posted by @Account Closed:
I am a real estate agent interested in purchasing a HUD 3 family home as an investment property for myself and husband. There is a broker listed for the property. If I bid on the property does it go right to the listing broker anyway or is there a way I can bid and potentially save money as a real estate agent not taking a commission. Thank you for any feedback.
I think if the buyer of the HUD property has an agent, the fee is split between the listing and buyers agent. If the buyer doesn't have an agent, then the sellers agent nets the entire fee.
I think you are trying to determine if you can (being a realtor), represent yourself to get the the buyers agent fee or you want to waive your fee and utilize it towards your bid amount?
Depending on who you talk to you might get a different response but a HUD listing agent would probably be a good source. I have heard some agents say they have been paid for representing themselves, some say it is a matter of disclosure etc.
Is there any requirement as a realtor that you disclose that you are an agent in any transaction especially if you are either the buyer or seller in the transaction?
What Brandon said. HUD has strict rules about agents bidding on properties for themselves. Be certain you are not breaking any of them before you bid. This includes not buying an owner occupant property as an investor(a felony).
As for your commission, you can't reduce it because you can not bid on this property for yourself, even if there were a way to reduce commissions in a hud sale.
At any rate, a HUD sale is different from a normal purchase in that there is no one sitting there making an emotional decision based on things like "oh look this agent is reducing their commission so let's pick that offer instead." It is based purely on a math calculation. Highest bid above the reserve price is selected
Several things are incorrect in your post. As a Broker, I have purchased 200+ HUD Homes over the last 20 years and it represents approximately 90 % of my flip inventory
As a agent bidding on a HUD property , the restrictions are no different than any other purchaser with the exeption of agents working for the Listing Broker are prohibited for bidding on homes for themselves
You can absolutely reduce and even forfeit your commission by placing $0 in the buyer's agent commission field. Placing $0 for an agent is more beneficial than collecting the commission and paying taxes on the property. Since the net to HUD is the only thing that matters to HUD, I can buy the property for 3% cheaper than a non agent. For example :
$100,000 Bid
$6000 Commissions (3% to listing and selling Agent)
$94000 Net to HUD
97000 My HUD Bid
$2910 Listing Agent Comm
$94,090 Net to HUD and I win by $90
If you work under a Broker, forfeiting your commission is subject to what is allowable in your agreement with your Broker
Residential Real Estate Agent · San antonio, TX · Member since 2013 · 130 posts · 44 votes
11y
Originally posted by @Account Closed:
I think you are trying to determine if you can (being a realtor), represent yourself to get the the buyers agent fee or you want to waive your fee and utilize it towards your bid amount?
Depending on who you talk to you might get a different response but a HUD listing agent would probably be a good source. I have heard some agents say they have been paid for representing themselves, some say it is a matter of disclosure etc.
Is there any requirement as a realtor that you disclose that you are an agent in any transaction especially if you are either the buyer or seller in the transaction?
You can only place a bid on a hud property through a registered agent.
That agent needs to work for a broker who is also registered with hud.
HUD prohibits agents who are affiliated in any way with a broker that sells hud from purchasing. This includes placing bids for family members etc.
So there is no way to place a bid for yourself without expressly breaking HUD rules.
If the OP wants to bid on hud properties, they can not be affiliated with a broker that sells hud and they must place a bid through a registered agent and therefore what commission is there for them to negotiate?
To clarify , the only Broker/Agent that is prohibited on bidding for themselves are if they work for a HUD Listing Broker
You are your Broker will need to have an NAID number to place a bid . There is no need to have any contact with the listing Broker and they will have no knowledge of your bid until it is accepted
I illustrated in my previous post how to reduce or forfeit a commission
I place a dozen or so bids a week and it can absolutely be done by the agent themselves and in no way violates HUD rules
As a Broker, I have purchased 200+ HUD Homes over the last 20 years and it represents approximately 90 % of my flip inventory
Somewhat of a side note... regarding the percentage of properties that you acquire through HUD, that is a significant number.
Do you find the strategy of getting properties through HUD to be at a material discount? What would you say has been the average percentage discount from the ARV that you have purchased most of the HUD properties at?
Where do you typically get the non HUD inventory from?
As a Broker, I have purchased 200+ HUD Homes over the last 20 years and it represents approximately 90 % of my flip inventory
Somewhat of a side note... regarding the percentage of properties that you acquire through HUD, that is a significant number.
Do you find the strategy of getting properties through HUD to be at a material discount? What would you say has been the average percentage discount from the ARV that you have purchased most of the HUD properties at?
Where do you typically get the non HUD inventory from?
I can only speak of the Denver Region as all of my HUDs have been purchased in Texas
Until approx 5 years ago there were absolute percentages that HUD would accept based on price reductions. Now the are no absolutes . There are 3 asset managers and I have a pretty good feel for what each will accept based on days on the market .
A poster above mentioned "no harm" having bids and then not turning in the contact within the 48 hours. While there is not penalty, I would suggest someone not doing this excessively as most of my bids accepted are asset review and I believe have a good relationship with the asset managers and having a reputation of following through gets me more of my lower offers accepted
Respectfully, I am not inclined to release the exact percentages that will probably be accepted. I have put 1000's of hours and 1000's of $$$ into formulating my strategies and wish to keep this info private for obvious reasons
Then you and all the agents in your brokerage cannot bid on HUD homes personally but that does not prohibit agents from brokerages that are not HUD listing brokerages
Respectfully, I am not inclined to release the exact percentages that will probably be accepted. I have put 1000's of hours and 1000's of $$$ into formulating my strategies and wish to keep this info private for obvious reasons
lol... my concern wasn't on what the HUD was doing or what specific formula you felt you were working on. My question was similar to asking any person or business entity what their cost of sales or profit margin was. Its a number and different question from asking a business to share a business secret of some sort.
I can see what the initial HUD requested bid amount is for any property in any city and can determine what the percentage is based on the initial bid and property ARV; but the actual bid that gets the property may be either lower or more than the initial amount requested by the HUD.
The question was on what you may have seen your average percentage on HUD purchases to be. You have no obligation to disclose anything though.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
11y
I bought a HUD home and didn't take a commission. It definitely helped. Also, I bid an extra $10. The highest NET to HUD wins.
Now my appraisal came in $10 short.... I had to write (2) letters to the underwriter I sh*t you not. (1) acknowledging that I new it was short, and (2) where the $10 was going to come from...
Then you and all the agents in your brokerage cannot bid on HUD homes personally but that does not prohibit agents from brokerages that are not HUD listing brokerages
Greg is right on. I am a HUD listing broker and I cannot buy huds or anyone in my office or family members etc. However any agent in another office that is not a HUD listing broker can buy a home for themselves and remove the commission.
Respectfully, I am not inclined to release the exact percentages that will probably be accepted. I have put 1000's of hours and 1000's of $$$ into formulating my strategies and wish to keep this info private for obvious reasons
lol... my concern wasn't on what the HUD was doing or what specific formula you felt you were working on. My question was similar to asking any person or business entity what their cost of sales or profit margin was. Its a number and different question from asking a business to share a business secret of some sort.
I can see what the initial HUD requested bid amount is for any property in any city and can determine what the percentage is based on the initial bid and property ARV; but the actual bid that gets the property may be either lower or more than the initial amount requested by the HUD.
The question was on what you may have seen your average percentage on HUD purchases to be. You have no obligation to disclose anything though.
Kenneth-
Bids that are accepted seem to vary greatly by region. In some areas, you may need to bid 120% or more of the list price to win a bid and other areas you may be able to bid 80% of the list price and win. Both of those could be a good deal depending on the region. I suggest people find an area that they are interested in and track the bids through either HUDhomestore.com and go to the bid results or HUDhomevalue .com. I find both of the sites to be accurate most of the time. You will need to add back in commission and such to estimate the true winning bid as the only number is the net to HUD number
Bids that are accepted seem to vary greatly by region. In some areas, you may need to bid 120% or more of the list price to win a bid and other areas you may be able to bid 80% of the list price and win.
Thank you for the information. Very good website. Based on the sales results in some of the areas that I looked at, this does sort of confirm that most of the auctions sell at very close to or at market value (might be very few exceptions).
The discount would need to be deeper and very. They are almost getting full price for the properties which may still require repairs.
Thank you for your response and for the wealth of knowledge you share on BP. It took me a few days, but I was able to contact the right people and find the answer. And sure enough, I can buy from HUD. Apparently, it has nothing to do with the designation and everything to do with relationships. We have no relationships with any HUD listing brokers, asset managers, etc., so it's all good!