HUD Guidelines 24 CFR 206.125 - Pricing/Offer

[Jesse Houser]

Sorry if I'm asking an already answered question, but I did a couple of searches on BP and didn't find anything that directly addressed this subject. I'm currently looking at property in Mansfield, OH that falls under the HUD Guidelines 24 CFR 206.125. From my understanding, this is due to the property having a Reverse Mortgage, and as such the bank will only accept offers that are 95% or more than the listing price. It also seems that after a period (typically ~60 days from my research) the bank will then accept a lower percentage offer.

Given that information, I have a couple of questions I was hoping someone could answer.

1. Does anyone have experience purchasing these types of homes? Any advice or guidance you may have?
2. In Ohio, what is the minimum percentage of the listing price that banks will typically accept?
3. How long does it usually take for a bank to lower the amount they are willing to accept for the property?

From the numbers I've run here on BP, I would need to get the house about $15k-20K below asking price for it to fit my target numbers. Just trying to figure out my odds of getting an offer accepted if I lowball it that much. This would be my first purchase, so just trying to get my ducks in a row.

Thanks for the help everybody. 

- J

[Pat Klug]

Below is info I found on a lawyer's  website:

Property is Being Sold Subject to HUD Guidelines 24 CFR 206.125

This property is a Fannie Mae Reverse Mortgage REO.

The code above allows an heir to purchase the property at 95% of the listed price.

Other stipulations of this type of property include:

• Property cannot be sold below appraised value (LIST PRICE)
• No mediation
• No electronic signatures
• No repairs, “AS IS AT TIME OF CLOSING”
• No buyer closing costs paid by seller are allowed on the HUD
• Buyer pays HOA Doc & Transfer Fee
• No utilities are on. Buyer can pay to have them on for inspection
• No agent transaction fees allowed on the HUD, regardless if the Buyer is paying
• Seller will pay Seller’s closing costs and provide buyer with $29.95 PDQ Hazard Report
• Any realty transfer taxes due will be the sole responsibility of the purchaser
• Seller will bring taxes and HOA current through closing
• 10% deposit on cash offers (Cashier’s Check)
• $1,000 minimum deposit on financed offers (Cashier’s Check)
• 60 day MINIMUM escrow period. Could be longer if title is not clear. If we can close sooner, we will.
• Offers that Do Not meet these Guidelines will be REJECTED
• Homepath financing is not available on these properties
• Properties sold in “AS IS” condition at time of closing
• PLEASE US BUYER’S LEGAL NAMES, WHAT IT SHOWS ON DRIVERS LICENSE
• If LLC, will need stamped articles of incorporation pages
• Buyer will need to pay $100 in order for utilities to be activated for inspections, or Selling agent may turn on utilities at Buyer’s expense with permission

Find even more information Here