Hubzu financing question

[Aaron Carter]

My wife and I are looking for a primary residence. We are both 25 with a little one due in July. Currently moving into my father and mother-in laws until we find a place to purchase. We own a duplex that cash flows okay right now but we are improving the property this summer; adding two more bedrooms and will be doing really well when everything is done.

We have been searching for a home for the last couple months and of course I am looking for a great deal. We found a foreclosure on Hubzu. I was unfamiliar with the site but I have read all of the threads about Hubzu on BP that I could find. I understand they are frustrating to deal with... I am willing to be patient if it gets me a deal.

We went and looked at this home. It far exceeded our expectations, which from what I understand is somewhat rare on Hubzu. It was recently built and I would say would conservatively appraise at $190,000. Hubzu has it listed as "own it now" at $158,000 with a "starting bid" at $120,000. I live in a rural area, it is not listed on our MLS and there have been no bids on the property for one month. So I don't think there is much competition for this property as not many know about it or are comfortable bidding online.

It was listed last fall prior to foreclosure at $227,000. The unique part of this property is that it has a detached garage with a separate living area that used to be a daycare that I could easily turn into a 2/1 rental for under $1,000 renovation. I expect I could get about $800 per month, however, I would need to include utilities as the unit would not be separately metered.

My wife loved the property and is really encouraging me to bid. They will honor conventional financing and cash offers only. They have a 4.5% buyers premium at this time, my mother is my broker/agent and said she will give me any commission she receives. This may justify part of the premium...

Problem is, I only have about $9,000 cash right now. Our duplex appraised for $92,000 when we bought it in very poor condition. We have since renovated most of it but have not had it appraised since. We owe $73,000 on it at this time. It would be tough to pull any equity out at this time with such little wiggle room.

Two questions:

Price dropped on May 14th by 6.7% Should I wait for the price to continue dropping before making a bid? As there have been no bids for one month...

Any ideas on financing to meet their conventional financing requirement with only $9,000 cash at this time? My wife and I have strong credit ratings and above average income for our area. I believe we could save another $4,000 in another 30 days.

Thanks in advance!