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Winning the Bid on a HUD Home

Posted By Paula Henry on Monday, October 12, 2009 6:46:00 PM | 6 Comments

In Pursuit of a Winning Bid

For the last eight months I have been working with a first time home buyer in the $80,000 price range. Based on her criteria, the area she wanted to live and price of the average home in the area, we knew it wouldn't be an easy search.

Not difficult, just not easy! Still, we were able to find homes she liked and made a few offers. One HUD owned home we lost by about $250.00. A couple of bank owned homes needed too much work; a few short sale homes we never received an answer on. Another lost HUD - this time by a lot more. Finally, last week we received confirmation our bid was accepted!

Not All Offers are Winners

The same week another offer made on a HUD home for a different client was rejected. Just so you know - I don't like rejection! Why the difference? As I stated last week, offers on HUD homes are becoming more popular with first time home buyers, with the asking price being overbid. Such was the case for my clients. The client I have been working with decided she could pay her own closing costs. By doing so, she didn't have to overbid and her offer netted HUD the highest dollar amount. My other clients needed their closing costs paid and couldn't overbid. Whether you overbid and have your closing costs paid or pay your own closing costs, it doesn't matter.

What does matter is what HUD nets - their bottom line. The second offer wasn't enough. As a matter of fact, the winning bid was $7000.00 over the list price and netted the bank what they were originally asking. One client will be closing next month while the pursuit is still on for my other clients!

Discussion

#1 Posted by Ashlee at 10/30/2009 7:24 PM

Gotta love HUD! It has taken as many as 3 months to receive a confirmation from HUD before. By that time we have already found another house!

#2 Posted by Kim at 11/2/2009 9:50 AM

I wonder why it takes so long to receive confirmation if your offer has been accepted. You would think they would be faster to unload the home!

#3 Posted by Joshua Dorkin @ BiggerPockets at 11/2/2009 -1:45 PM

In the current housing environment, your bids on properties need to be as clean as possible with as few contingencies as possibly, particularly when you're talking about HUD properties and bank REOs. Congrats on the accepted offer, Paula.

#4 Posted by Printable Eviction Notice at 11/3/2009 -1:20 PM

Loosing the bid by $250 must have been a heart breaker. Good luck with your other clients.

#5 Posted by Paula at 11/22/2009 7:01 AM

Ashlee and Kim - The HUD process here in Indianapolis is very quick. Once we submit an offer, we receive verification the next day whether HUD accepted our offer or not. The last one I closed took exactly 22 days from offer to close.

#6 Posted by Paula at 11/22/2009 7:02 AM

Joshua - You are so right! Contingencies muddy the proverbial waters of the real estate transaction.