I put in a bid at $33k on a 5 bed 1.5 bath home and got a counter offer of $52k. The home is in need of about $25-30k of work. The goal is to wholesale the property around $61k, ARV is about $150k. My concerns are that the property has been on the HUD site for some time and the price has come down by $30k over that time period. Should I run with this or sit this one out?
From my understanding HUD reduces the price by 8-10% every 30 days on the market. This is why they usually don't last long (good deals). Curious to know how long its been on the market and what the listing price was when you put your bid in. Based on what you've stated and your interest I would counter at ~40k. Best of luck!
how solid is your ARV? Seems like a good deal to me.
If it is on HUD at a steal there must be some major repairs...maybe double your estimate.
5 bed 1.5 bath? Thats... interesting? Are you sure there will be a buyer?
Hey Tony, a few questions. How much was it listed for from day 1? Thats usually a good as-is market value. Has it been on and off HUD or just sat the entire time? What % are you bidding at? Why was 33 your #? What % of asking price did they come down from the listing price? Are you bidding everyday or just once in a while?
You have 24hrs to accept so I would drive to the house and inspect as much as possible. I just drove 2 1/2 hours each way to check one out. I won't be doing that anymore lol. But it's a deal. Besides if you're bidding 33k then you have your reasons. Meaning that's where your comfortable not 52k. The most important question though is, are people buying cash in that neighborhood and how many people??????
DING DING DING! :0
@Nathan Paisley you can't really accept a HUD counter, just rebid again at the price HUDs counter was. If no other higher bids come in then they will accept it.
@Tony Thompson a few things to consider with HUD
1. Huds counter is net to hud and does not include commissions.
2. You will lose your earnest money if you get your contract accepted and then back out.
3. Extensions will cost you money if you can't find a buyer
4. You can't assign a HUD contract.
@Mark Ferguson the ARV is solid maybe a 1% variance
@Patrick Jacque I dont have a buyer lined up.
@Nathan Paisley the first time it popped on my radar it was at about $58k (not sure dont have the info on hand) that was 3 or 4 weeks ago I started at that point bidding $22k and raised it gradually and I am bidding 2x weekly
Here's what I would do. Go to the house inspect it. See if it's worth the hassle of bidding everyday. If it is, bid every single day at the same price roughly 56% of asking. Do it everyday no matter what. Eventually they'll counter but don't bite until they accept your bid or come down to around or below 80%. Then factor in repair costs and your fee.
Don't raise your bid. It's a computer not a human.
But remember a human will make the final decision.
@Nathan Paisley it is a person who reviews the bids, not a computer. I have heard of asset managers warning bidders not to bid everyday over and over the same amount. Asset managers are given guidelines of what to accept by HUD, after a certain amount of time they an ask for special approval of low offers. At 60 days on the market they usually start considering lower offers.
I don't know why the list price is so important here if the value is really that high and repairs that low. I would say coming up with an ARV with 1% variance is virtually impossible and that sends up warning flags to me. I've been valuing, buying, selling and listing homes for 13 years and I would always plan on at least a 5 percent variance when valuing a home.
Mark Ferguson I appreciate that feed back on ARV my number is actually 11500 less than the average I took from 5 comps and the tax assessment (I know tax has nothing to do with value) end buyers (financed) for some reason look at the number pretty hard in the area the property is located!
Mark Ferguson I appreciate that feed back on ARV my number is actually 11500 less than the average I took from 5 comps and the tax assessment (I know tax has nothing to do with value) end buyers (financed) for some reason look at the number pretty hard in the area the property is located! I lowered the ARV because I believe there are an unusual amount of wires attached to the outer structure. They take away from the "curb appeal" of the property!
Actually asset managers never see any bids until it gets accepted. They have no idea who bids or how many bids were made. You're aloud to bid every day. That's why it resets every 24 hrs. After so many days I've been given huds a few thousand dollars above my asking price net to HUD.
I never said it was important to know list price other than that's where they get they're as-is fair market value range. It's just a good starting point of what they think it's worth.
@Nathan Paisley I am a HUD listing broker. The asset managers see all the bids and they have told me directly how it works. They accept the bids manually and create the counters. This is why bids are accepted at different times of the day. The busier they are the longer it takes the AM to look at and accept bids. I have had multiple investors tell me they were warned by asset managers to stop sending in the same bid every day because they were tired of it wasting their time. The asset managers are different in every region so they may not all be annoyed when investors submit a lot of bids.
My point on the listing price is who cares if you bid 86% or 56%. If it is a good deal and the numbers work I will bid 110%. HUD values are all over the place; low, high, right on.
Hmmm I've spoken directly to an asset manager and he said he doesn't see it till it's excepted... If the listing broker/asset manager wants it off the books they will send an email with a counter net to HUD meaning commission included in total purchasing price. I believe they only get annoyed when the investor doesn't close on multiple deals. That wastes time, money and they have to put it back on HUD. Just my experience with HUD.
@Nathan Paisley the listing broker has nothing to do with the counters or bid acceptance. It is all the asset manager.
The counter is very specific that it is the net to HUD. The commissions have to be added in.
I bid on a HUD over several months in 2012, ended up getting the number down a bit over 40%. Found a number I was comfortable with and then went down about 5% more, started bidding, would raise up a thousand every few weeks then hit my number. We were still a bit apart, so I dropped back about 2-3%, got a call the next day and they said will you take at the number from two days ago, ie highest, so I accepted. Believe the numbers were as follows, HUD went from 108->97->87->accepted 64. I had bid from 60->64. The peak market was about 144 and current ARV about 120, needed maybe 1k, paint and a few repairs. A great rental now!
is right on. You can't be at 1% variance. I'd say 10%. And while I'll look at tax assessment, the value is actual closed sales within the last 6 months. for me that carries the most weight. I've been buying HUDs for decades and recently bought 9 last year and sold 6 last year so did 15 HUDs. The prices are all over the place.
This is a funny tread, more of you are wrong and I am right then anything else.
Is there any other way to get a lower accepted offer on HUD other than placing a bid online?
Ex. Calling the asset manager and explaining the condition, sending in a fax, etc...
If you have a relationship with HUD, you can talk to the asset manager, but you be wasting your time on explaining the condition because HUD sell AS-IS. And HUD receives the low ball offers every day.
@Winston Spence no. They use the system for everything and it is designed to take any asset manager opinions out of the acceptance process. The value is based on the condition already.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing