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
What if my broker does list HUD homes but is NOT listing the one I am wanting to bid on? A different broker/company, than the one I work for, is the listing broker. Because my broker does and will list HUD Homes does this make me ineligible for ALL HUD home bidding or just the ones my broker lists? This is so dang confusing AND I am a Realtor!
What if my broker does list HUD homes but is NOT listing the one I am wanting to bid on? A different broker/company, than the one I work for, is the listing broker. Because my broker does and will list HUD Homes does this make me ineligible for ALL HUD home bidding or just the ones my broker lists? This is so dang confusing AND I am a Realtor!
If your Broker is a HUD listing Broker you cannot bid personally on any HUD homes even if it is listed by another brokerage
Thank you @Greg H for the reply. Guess I am screwed unless I switch brokers! At least there are a lot of other avenues to purchase some great deals in my area.
The commission will be paid to your brokerage and then subject to the terms of your agreement with your broker. How does your agreement deal with personal purchases? Are you allowed to forfeit your commission? This is more of an issue with your broker than with HUD
As a Broker, I always put my commission as $0 and reduce the purchase price as I am a cash buyer
@Greg H. Thanks for your insight. If my broker is a HUD listing broker, can I have an agent from a non-HUD listing broker place a bid for me? I understand that I cannot place the bid for myself but wasn't clear on if a non-HUD listing broker could or if I cannot purchase a HUD properties under any circumstance.
@Greg H. Thanks for your insight. If my broker is a HUD listing broker, can I have an agent from a non-HUD listing broker place a bid for me? I understand that I cannot place the bid for myself but wasn't clear on if a non-HUD listing broker could or if I cannot purchase a HUD properties under any circumstance.
Unfortunately no. Hud prohibits any agent or spouse of a listing broker from bidding on HUD properties no matter who placed the bid
Your broker would probably have an issue as well with you making offers through a different brokerage. I would imagine it is against your agreement with your broker