Owner occupancy for HUD bidding and purchase

[Cherie Ganesh]

I am a commercial re broker in Memphis and own multiple commercial and residential properties. I have a person who helps us with maintenance on our SFR investments who needs a place to live but has limited resources so we're looking at a new HUD listing in Memphis, TN that's in a pocket we would typically invest in. Since only OO bids can currently be made, if we do a bid showing my husband, me and the handyman as purchasers but only my handyman being the OO, is there a minimum percentage of ownership required by HUD for the sale to be legal OO purchase? Also, we want to make a bid that gives us best opportunity for acceptance by HUD so planning to not ask for any closing costs from HUD, no buyer broker commission, and cash closing ASAP. If we offer 90% of asking price and no one overbids asking price, should that put us in a favorable position? Am I correct in assuming if not buyer broker commission that only commission HUD pays is the $1250 to listing broker? Property just went on market on day ago. Thanks for all input.

[Greg H.]

I would caution you not to go that route as you will sign a document at closing stating that you will occupy the property for 12 months.  When you provide proof of funds that you are putting up 100% of the funds, the Asset Manager likely will cancel the bid

My suggestion would be to buy the property in his name and you be the lender.  There is no issues in doing this

On low dollar properties, the commission is now $1000 instead of $1250. The automatic acceptance number of a net to HUD of 88% is skewed by the flat fee commission but you should get a bid accepted by subtracting $1000 and 3% of the list price. There used to be a glitch in the system with the flat fee but it seems to have been corrected