How Much EMD on a $630k HUD home?

Question

Good morning all.  I am an agent writing an offer for a client of mine on a HUD home.  The ask price is $630k.  I've never done a deal through HUD homestore before.  I read an article saying that properties under $50k was a $500 EMD and properties over $50k was a $1000 EMD. Is that accurate or should my client expect to put more money in as an EMD?  Any advice is appreciated.

Greg H. · Answer

@Sean Price

So are you are making an offer via HUDhomestore.com?  If so this is done online only and the amount of earnest money is not even part of the offer process.  The only monetary fields to input are:

Offer amount

Closing costs desired if any(Owner occupant only)

Selling Broker commission(up to 3%)

Greg H. · Answer

So I believe the replies here are missing that you are referring to a HUD home.  You are correct that the EM is $500 for under $50K and $1000 for over $50K.  There was a time when the EM was $2000 for over $250K but I do not see that on the site anymore.  If you call tell me who the asset manager is I might be able to give you a direct contact

There is zero advantage to putting in more than the required EM on a HUD property

Wayne Brooks · Answer

The more EM, the stronger the offer looks.

Sean Price · Answer

@Greg H. Thank you for the input.  You are correct, there isn't even a place for EMD.  We ended up being out bid, figured we would but it was worth the shot.  Thank you for all your help and input!

Sean Price · Answer

@Nate Bell

Even on HUD Properties?

Nate Bell · Answer

@Sean Price

1% is a good rule of thumb

Sean Price · Answer

Thank you all for your reply.

@Greg H. Thank you for the offer regarding the asset manager.  I remember reading in one of your previous articles that there was no advantage to putting a higher EMD than required.  I wasn't too sure which way to go so we did 1% of the offer price, which came out to only $540k once we calculated repairs (so $5400 EMD).   I think the chances of the buyer winning the property are very slim, in our market here in NOVA even properties needing rehab are ending up in multiple offers and going over ask.   I predict this property will go closer to $700k.  The ARV is around $800k so it looks attractive to most, but it needs at least $150-$200k in rehab to get to that value.

With your response, I realize that the EMD of $5400 is still too high, I will certainly keep this in mind for the next deal.  Thank you again for your time!

Rick Scott · Answer

EMD proportional to the value of the House. But you can always consult with experts who will accurately calculate the cost of the transaction for you and make an assessment of the house.

How Much EMD on a $630k HUD home?

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