I'm looking into a property that's on HUDhomestore.com. I am looking to purchase this home through my LLC to flip. I am also a licensed agent but I'm new and haven't had much experience writing offers yet. They say there is an owner occupied period for the next 4 days. I was hoping to write an offer as an investor anyway so that when the owner occupied period ended they would have my offer ready to go. It seems impossible to do this on there site. Can you really not submit an offer? Are there any tricks in the system for getting an offer through that way you're ideally the first offer?
Hi @Andy Sturm , HUD has this crazy bid opening procedure. They actually made some changes to the bid opening procedure a few months back, but I still bid on quite a few properties there and have successfully won some.
Basically there are a number of categories - lottery, exclusive, and open (there is also extended and one more, but these are all open to any bidder). Every 24 hour period is a "bid window" with the exception of weekends and holidays. Every morning at a specified time, all bids from the previous bid window are opened and reviewed - however, only bids that qualify during that period (nonprofits, GNND buyers, owner-occupants, or what have you) are considered valid. If none of the bids are above HUDs minimum, then all of the bids will be countered with the "HUD minimum acceptable bid". Even the counter is subject to another 24 bid period though - so that gets tricky too.
HUD is done as an automated system. The agent simply opens the offers, ensures they meet the criteria for that period (so they remove investor offers until they are eligible), and feed them into the system. The system then spits out answers to all of the offers for that day. How you work HUD is to play that silly system. The "Minimum acceptable offer" on HUD will always be somewhere between 81 - 90% of the list price, and it changes based on a whole host of factors. I suggest putting in an offer of less than 80% list, and waiting for the system to counter with its lowest acceptable amount. If that amount is something you're willing to pay - then you can submit a new offer. I would point out that the "lowest acceptable amount" they counter with is a net proceeds to HUD - so its the offer amount less commissions.
As far as the timing goes - because of the bid opening procedure - there is no "first offer in". Wait the next 4 days, then submit your offer. It will be reviewed during the first day that investor offers are allowed. You can also check "keep my offer as backup for X days" and they will essentially resubmit your offer every bid period.
Let me know if I can answer any more questions about it - I can even go online and look at the specific house you're talking about and can walk you through a little more if you'd like.
Thanks @Travis Lloyd , really great info. I submitted a low ball owner occupied bid to get the counter. Now when the owner occupied period expires I will have to lowest acceptable amount HUD will take for the property. The address is 5479 Senour Dr. West Chester OH 45069. My only thought is even with that information another investor can just bid anything above that and beat me. The time owner occupied period also ends is over the weekend so Im sure even if I did submit an offer they wouldn't look at them till Monday giving other investors the whole weekend to submit offers. So the way I understand this sale would play out is I wait to submit an offer on Friday at midnight when the owner occ. period ends, but no offers will be reviewed or accepted until Monday. Sound correct to you? If you don't mind checking out the house and letting me know what and how you would approach making the actual investor offer I would really appreciate it.
As a agent submitting the bid you did agree to the terms and acknowledged the bid was true and the owner occupant intended to occupy the property. Probably not a good idea if you are not planning to occupy
I buy 2-3 HUD homes a month and my best advice is to know the numbers and the ARV on the property you are bidding on. Some areas properties go for over list and some areas they will be reduced several times and you will have an opportunity to "low bid". Typically, these properties have been on the market for 60+ days
During the owner occupant period, you will not be able to place an investor bid. Typically, the minimum net will be 83-89%. Keep in mind that the "counter" is not a counter at all in the traditional sense. Even if you rebid at that price, another bidder can out bid you
Good Luck !
Thanks, @Greg H. , Thats kind of what I was thinking. The house needs a lot of work but the asking price is fair in considering the work. I would be happy to pay the asking price and above. Basically what your saying is make my offer on what I could afford to pay based on the market rather than HUDs counter/lowest acceptable amount. The low ball idea would be more ideal for a property with less demand.
The bid was actually for a family member who is selling their house July 31 and is currently looking for a home, would be happy to purchase this home, and would like to live there for a year based the offer I submitted. The offer is completely legitimate and I would be happy if they accepted it. I have read the rules on the consequences for investors submitting a false owner occupied bid and I would want nothing to do with that.
Great information Greg, really appreciate it.
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