Real Estate Investor · Seattle, WA · Member since 2010 · 31 posts · 0 votes
Two days ago I put in an offer on a REO owned by HUD. My agent went to check on status of offer yesterday and said HUD had canceled my offer with no explanation. Can someone shed some light on why this may have been the case? Here are the details:
Asking $75K
My Offer $50K cash, close in 5 days (contingent on inspection)
Est Cost Repairs: $35K
ARV around 160K
Also, when my agent submitted offer she had said the website said there was only 6 hours left to bid on the property, but she didn't know for sure. I'm not sure if my agent is just not on the ball or perhaps inexperienced with HUD, or is HUD just 'like this'. I feel she should be guiding me through this process. Am I wrong?
Investor · Fort Wayne, IN · Member since 2009 · 391 posts · 257 votes
15y
Mary,
I actually had an accepted offer by HUD that was canceled because I had the quick close option in the bid.
I was told that HUD closes in 45 days. Because our bid said that we would close in 15 days, they canceled our accepted agreement and put the property back on the market.
You might check and see if this is the issue in your case.
Good Luck
Chris
Residential Real Estate Broker · Pensacola, FL · Member since 2012 · 221 posts · 49 votes
13y
Mary M. >>>Asking $75K
My Offer $50K cash, close in 5 days (contingent on inspection)
Est Cost Repairs: $35K
ARV around 160K
HUD rejected it due to price. They don't care about a less than 30 day close. With the numbers above, it sounds to me like you're cutting your nose off to spite your face. Is it not a great deal @ full list? You're going to lose it to another buyer probably.
HUD does accept inspection contingencies, that prior post is erroneous.
In our area they sell at an average of 98% of list. I'm unsure of the data for other areas. I do know that in our area, if the estimates for repairs and ARV are accurate, that listing would be in a multi bid situation and sell for probably at least 10% above list.
Real Estate Investor · Seattle, WA · Member since 2010 · 31 posts · 0 votes
13y
Thanks, Sandy, for the response 2 years later! Yes, lots have changed since those days. My experience with HUD through to the present (I have had successful purchases) is that it is dependant on the specific area and DOM.
Residential Real Estate Broker · Pensacola, FL · Member since 2012 · 221 posts · 49 votes
13y
Mary M. You mean HUD won't give us 2 years to make up our minds? LOL...OmG...sorry, I'm old and I told my dog two hours ago I need a nap desperately.
I like your website. We've always found our investment buys from the MLS since we're brokers, but I want to get more involved with the investment end. We're working on a site to find sellers.
Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes
13y
@Mary M.
Since you bid on the 21st day, you must be an owner occupant as the first 30 days are reserved for owner occupants and HUD will not accept investor bids during that period.
Investors/cash bidders must close in 30 days, owner occupants can sellte in 45 days. If you exceed those tiem frames HUD requires an extension which they charge for, even if the delay is their fault. They will entertain a request for refund of the extension fee, but it is not a sure thing.
They are fussy on the deposits, we recently had one kicked back because the deposit was too much. There are several asset managers for HUD and they have slightly different rules. One of the asset managers requires the deposit to be a ceritified check, while another accepts the broker escrow account check.
If you don't have the original signed docs to them in 48 hours, no faxes acceoted, your contract will be rejected.
They will accept less than 80% but it depends on the days on market and who the asset manager is. We did have one accepted at 44%, but that is extremely rare for the ones I'm tracked. And obviously the nicer the property or the lower their price is in relation to the value the more competititon that there is. One recent HUD sale that we did not get was a house built in 2010 and sold for almost $300,000 when new. HUD sale in 2012 was for about $125,000.
They are fussy, and have a bunch of rules, many of which are on their website www.hudhomestore.com. No all of their listings are bargains, some are just plain over priced and they almost always need a work sometimes a lot, some times not so much. In cold climates freeze damage is a big concern as the properties have almost always been vacant at least through one winter.