What is a HUD home, where do you find info, how do you buy one?

Question

hi everyone,

I was hoping someone could explain to me exactly what a HUD home is.  I heard if you buy one as an owner occupy, you get first crack at it.  Where do you find these properties and is there a special way to purchase one such as having an agent who specializes in something like this. I bought my first property and now I am looking for my second.  With all the competition, I am trying to explore many options to get an advantage. If anyone could explain some of this to me, or point me to another forum/article that would be great!

Thanks  guys

Arlan Potter · Answer

HUD - Housing and Urban Development. A government agency that guarantees loans so that banks will loan to lower credit buyers(and others)similar to Fannie Mae.  Years ago, before the crash, before everybody and their neighbor started buying houses, you could get a deal on a HUD repo. They would actually accept bids that would net them 85% of their asking value.  Not so much anymore, too much competition.  Also more people seem to be buying as owner occupant so few hit the investor level.

In order to try to buy one you have to have a realtor who knows how to go throughout the steps to enter an offer. If you get the offer accepted you will be required to submit a proof of funds letter from a bank.  If you have that and your realtor submits everything correctly you may get to buy the house. I have lost a couple because my realtor made a small mistake on the submission and the bid was rejected and another buyer slipped in.

Find a. Realtor. That can help you.

In 2005-2010 I bought quite a bunch of HUD houses, none since.

One of the first HUD houses I bought was in 2005, a small one bedroom house that I bought for $5000.00.  I have had the same renter for years, currently $300.00 month.  Paid for that house a few times.

Mark Ferguson · Answer

HUDs are held for owner occupants, but city employees are given no special advantage.  Cities themselves can buy some HUD homes before they hit the market, but not city employees.  Also the firefighters, police, teachers and EMS workers only get special treatment on good neighbor next door houses which are about 1% of HUD homes.  They get no special treatment on regular HUD listings.

Here is an article on the HUD process, it is a little old now and some things have changed.

http://www.biggerpockets.com/renewsblog/2013/07/07/buying-a-hud-home/

Nathan Paisley · Answer

There are a few ways to purchase Huds. What are your intentions? Buy n hold or flip? I haven't financed through hud before sorry. But I would call all the listing agents in the state and ask them how many have they closed on and how they were closed. My experience with theses agents is... They suck.  Most agents are lazy. So finding a good one that hustles is key. My brothers my agent ;)

Nathan Paisley · Answer

Go to hudhomestore.com bid as an investor and close with cash or flip it the next day. You're bidding against an algorithm not a human. You can bid once every 24hrs on the same house till you get a counter or someone else won the bid. You only get one counter and you can't counter back. The entire process resets at midnight.

If your bid is below $49,999 then you only pay a $500 deposit. If your bid is over that you pay 1% of asking price up to $2,000. Once you win the bid you have 48hrs to turn your package in with money order. You need a realtor/broker that has an NID number to bid, so not every realtor/broker can bid. But they can get one easily. Once you're package is received it takes about 5 days for them to confirm everything's in order and then you have 30 days from that point to close with cash.

You can also extend your time 15 extra days with $250 additional funds. You can do this twice only. After that you have to close or back out. This will piss off asset managers and anyone else involved. Don't waste people's time.

Hope this helps.

Nathan

Arlan Potter · Answer

www.hudhomestore.com

Any(maybe) realtor should be able to bid for you.

The houses are held for owner occupy or city employees like fire fighters, police, teachers first, and then if no takers, they open to investors.  Supposedly a $250,000 fine for an investor to buy and lie able living in the house.

It used to be easy to buy HUD houses, not so much anymore.

Christian Bors · Answer

I would be careful if you buy a property as owner occupy and then decide to flip it.  I have been reading more up on this topic, and most would consider that as mortgage fraud. I'm sure there will be investor's that are upset they weren't able to pick up that property due to it "owner occuiped."  Hence, they will no hesitate turning you in.

Bryan Wilson · Answer

Finding this thread interesting.  Keeping an eye on you Christian.  :)

So if I am reading this correctly, one can purchase these HUD homes and basically flip them?  If a person is suppose to occupy the place I guess there isn't any sort of time frame one is to be in the house.

Christian Bors · Answer

I'm planning on buying and holding. I want to use the strategy of putting down as little capital as possibility so I can quickly expand my portfolio.

Bryan L. · Answer

HUD homes can be great deals.  I've bought them before at about 60% of the list price.  Many people say that this can't be done, but it can.  Especially if they have been on the market for a while.

Christian Bors · Answer

@Nathan Paisley thanks! Sounds like you may have bought hud homes before. When you purchase a HUD home, is there any special financing available like the homepath loans?

What is a HUD home, where do you find info, how do you buy one?

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