HUD Pros? Cons?

Question

Why would/wouldn't you buy a HUD?

John Fisher · Answer

Shane, you buy HUDs if they make sense. I've been buying HUDs for over 8 years. Study the website, learn the formulas. View the properties, determine your price points and have at it.
As Jon mentioned, many are snapped up by owner occs and non-profs; some of the stinkers can turn out well, too.
My company has purchase over 50 HUDs per year for the past 4 years. We've done well. Our bid to award ratios remain strong; currently we get 2 out of every 3 we bid on.
Good luck.

Ralph S. · Answer

I've bough a couple HUD's, some years ago.  It's true, investors only come into the picture if it doesn't sell to owner occs, but, I found duplexes usually don't go OO.  We got ours between 5-10% below list.  I don't know if the bid process remains the same, but, bids are published and we found ourselves down at the realtors office at 11 pm to up our original bid before the midnight deadline.

My problems weren't in the buying, my joys came after purchase.  In one, we found their "weatherization" wasn't effective, and we had seven busted water pipes.  In another, their disclosures didn't include a stack of repair orders from the local municipality.  Seems the house was condemned, which is why the previous owner was foreclosed on.  Found out that the condemnation was the city's way of closing down a crack house.

But, in the end, they were all very good investments.

Richard Warren · Answer

I have purchased from HUD as an investor. Definitely harder than an owner/occupant, but certainly not impossible.

:cool:

Mike V. · Answer

One nice suprise I had on the latest HUD home was that the Lead report included a lot of exposed/flaking lead paint on the soffit and fasica and HUD paid 2K to have it all scrapped and primed.  The one before that they paid to have termites treated.  The two that I have bought have been for 80% and 85% of an already reduced asking price - 54% and 77% of original asking price.

Jon Klaus · Answer

I am not having the long close time issue.  Mine have closed within 30 days.

Scott M. · Answer

Like any deal there are good/bad points.

What I don't like:
- It is the Government and they take FOREVER (at least in the markets I have bought).  I had one take 6 months from EMD to close.
- OO do take a lot of the good deals - and frankly there are people who scam that system so it isn't a level playing field
- No one to talk to - whatever broker that handles them normally doesn't care about buyers becuase they have the gov. contract locked up - so no one to reach and very poor customer service

What I do like:
- $500 EMD.  If your house is trashed I can walk away from $500.  A Bank REO that requires 10 or 20% may be a different story (but I agree you can work out a deal if the home has been trashed....in most cases).
- You find out in a few hours if you got the deal
-  The ones I have gotten I have gotten well below the normal discounts in the area

If you can get over the long close time - the poor customer service then a deal is a deal is a deal.

I have just learned to get over it and expect it to take a year to close and when it closes in 4 months I find myself plesantly surprised :)

Jon Klaus · Answer

I am having pretty good success with HUD's.  I have gotten a couple for @65% of their asking and all of them for less than 50% of tax appraisal.

Usually to get a good buy, they have needed repairs which helps weed out the OO's.  Also they need to be on the market for a while and undergo a couple of HUD price reductions.

Occasionally, they are priced right at the outset.  I bid on one like this yesterday.  I bid $1150 over asking, but I could still get beat by an OO who bids less.  I'll find out in a few hours.

I am winning less than 10% of my bids, but that is fine with me.

"Also here in Texas you have to use their title insurance company which is Goverment at it's best."

This has not been true for me, I've had the option to choose my own title company.

HUD is working for me.

Masa Don · Answer

HUD is good and bad, deals have become very marketed and therefore brokers have taken advantage of the idea of "forclousures" being a great deal even if they are not, so uneducated folks are buying not so good forclousures at inflated prices. The benefit to Hud is that they do a quick walk through the property for you so you can bid away with out haveing to go to the property, this is nice, also a few postings have mentioned that they have lost their earnest money, I too have lost my earnest money however after the fist time I learned my mistake and all you have to do to back out of a contract and get your money back is expose somehting they did not in thier walk through, this happened to me on my last hud deal, I found a water leak they did not mention stopped the deal and got my money back. HUD is a great back burner

Chris OToole · Answer

Also here in Texas you have to use their title insurance company which is Goverment at it's best. Star Title in Houston is who they use, they are rude never on time and don't care about you either way,,,,, and on top of that if you want title insurance with HUD you pay for it, so when you are getting harassed and not helped by the title people, just think .... im paying for this :)

There are some good deals that pop up, just do all your homework.

Jim Doine · Answer

Another warning about HUD. I had made my offer, sent earnest money, obtained financing, Waited and waited while they completed the typical government paperwork. Within a few days of closing I found out I personally had to sign everything within 35 miles of the subject property, no power of attorney or courtesy signings at Title companies or out of area Attorney Offices. I was in Oregon, the property was in Indiana. The cost of travel to Indiana made the deal unworkable. I backed out losing my earnest money. I haven't attempted a deal with HUD since.  Jim

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