Bidding on a Hud House

[Roger Heiser]

How low of a bid may HUD accept below their asking?

[Mike H.]

Just pick a number that works for the deal and stick with it.

I'll have my realtor keep entering the number every other day or so.

I literally just got one about 2 weeks ago where they accepted an offer I had put in over 2 months ago! Never seen anything like it.

The house had fallen through before and then came back to investors. I put a bid on it about 2.5 months ago and it was gobbled up by some other investor that same bidding day.

Then 2 weeks ago, my realtor emailed me and said I had gotten another house. I said how can that bid because I wasn't bidding on any. :-)

She said they had pulled up the offer I put in the same day as that other investor's winning bid and they were going to accept mine.

So, again, just keep putting your offer in at your number and hope that they come down to your number.

As for discounting, here's what I typically see.
1) Based on condition of the home, area, length of time on market AND the price of the home.
2) Typically, I see 15 to 20% discount when they first come out to investors. Nicer homes (150k+ tend to have lesser discounts in the beginning).
3) When it hits 45 to 60 days, I see them sometimes coming down another 10% and sometimes staying put.
4) Usually at 60 to 75 days they drop the price 10% from the list and then stay at their discount amount 20 to 25%.
5) Then once it hits 90, they can sometimes be had for 30 to 40% off the list.

But I've seen them come down to 60% of list on a house on the market for 45 days that was in good condition in a good area too. So it really just depends.

btw: When I say discount off list price, I'm referring to the offer being put in as Net to HUD. So on a house listed at 100k, you have to put in the offer at 80k Net to HUD if its at a 20% discount. Your actual offer ends up being a little more than that (3 or 4k) for the realtor fees and such. That number increases the higher the price.

But their formula is based on the list price and the net to hud. If you put in your offer and they counter, you'll see the math. Same with the price reductions. Always 10% exactly when they do them. Its all some crazy formula they have. Just need to get lucky and you can get some crazy good deals there though.