Homeowner · Longview, TX · Member since 2013 · 131 posts · 17 votes
What are the rules regarding wholesaling a HUD home? Ive read several blogs but still confused. If they accept whats my timeframe? Are there specific rules in different States? Im in Texas.
Hallandale Beach, FL · Member since 2014 · 82 posts · 12 votes
11y
@Greg H. thanks! I have another question. John Cochrane says in his course that you have to bid on the HUD property every day until the property has an accepted bid. Will a broker submit a bid for you on a daily basis for a HUD home?
Most brokers are going to want to see your ability to perform as an investor to do that kind of work on a day to day basis. If I were you, I would focus on developing a business relationship with a broker.
Am I assuming that you are going to try to wholesale HUD homes ? If so, be upfront with the broker about doing so as it potentially could cause him/her some issues
With HUD you :
Must provide proof of funds to cover the purchase price
Earnest money of $500 for properties under $50,000 and $1000 above $50,000 is non refundable for Investors
You are not permitted to market the property until you close on it despite what the "Courses" tell you. This could penalize the Broker
Hallandale Beach, FL · Member since 2014 · 82 posts · 12 votes
11y
@Wayne Brooks @David Krulac @Mark Ferguson @Greg Hall Thanks so much Greg for the info. Actually I am a cash buyer and have my own proof of funds. My intentions are to buy the HUD property (or a wholesale property), refi, then sell it on lease option and repeat. Since I am just beginning, are you saying that brokers will not submit my bids daily until build a relationship with them? From my understanding, John Cochrane says that you have to bid daily to get the properties. Wayne, David, Mark, any comments from you experienced HUD home purchasers? By the way, I live in the Miami/Fort Lauderdale area (in case this matters).
If you are financing anyway, why buy for cash? Are you expecting to increase the value due to fix up? If the value is not significantly increased, I might just buy with cash.
Sometimes I'll bid every day, depends on the property and what I'm willing to pay. If you bid and say that they can hold your bid, they will notify you when they receive other bids, so you can still see if there is a lot of action on a specific property. That can also help to gauge how popular the property will be to future buyers and renters.
Hallandale Beach, FL · Member since 2014 · 82 posts · 12 votes
11y
@David Krulac I will be buying with cash to make the transaction quicker, then once I have a tennant in the property (tennant/buyer) then I will get conventional financing through my bank and cash out.
Do you know of a broker in the Fort Lauderdale / Miami area that is very experienced in buying HUD homes? I would like to work with a broker that is a member of bigger pockets.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
11y
In my experience bidding every day does not help unless you are raising your bid amounts. I have heard from some investors who bid everyday that the HUD asset managers told them to stop bidding so much. In the HUD system I do not think bidding everyday helps unless you are changing the price slowly higher. However, the properties HUD usually takes low offers on are on the market more than 60 days. When they get a low bid they usually will counter that bid if the home has been on the market a while and they won't accept less than that counter until the 60 day mark.
I would agree with everything you said, except that in my experience sometimes the Asses Manager will accept less than the counteroffer. Key word is "sometimes." And you're right if you indicate to hold offer there is no reason to bid every day UNLESS you're raising your bid.
Can you add a party to the contract or double close if you are looking to wholesale? I know there are guys out there wholesaling these but I haven't attempted to implement this strategy yet.
I have bought several HUD properties this year. In my area there are 3 HUD asset managers. They each have their own separate and different tendencies . I keep tract of each property, the DOM when prices are reduced and what % discounts accepted for each asset manager. Over time you will start to see patterns. This will allow you to time your offers and bid amounts. Putting in the same offer each day is probably not the most productive thing to do.
Hallandale Beach, FL · Member since 2014 · 82 posts · 12 votes
11y
@Randy King thanks so much for letting me know. Do you find you get good deals in the Alabama area? I am in the Miami/Fort Lauderdale and there doesn't seem to be much inventory in the two counties I am searching (I am not sure if this is just the time of year).
The HUD inventory is low in my area at this time. I do look for a specific type of property and try to be patient and let the price come to me. However, HUD is not discounting as much as they were even last summer and are waiting longer to reduce prices.