How should I structure my HUD bid for best chance of winning?

[Jason Ligon]

My wife and I are about to put a bid in on a HUD home. This will be a bid during the initial owner occupant 10 day period. We love the home and it's in a great area. HUD's as-is and list price is $114K for the property which is way less than the house is actually worth. It's insured with $2000 in repair escrow. Just needs a few minor repairs. The basement will need some form of waterproofing (which they didn't catch on the FHA inspection). **This would be an out of pocket expense after closing if we won the bid. We're approved for $120K FHA 203(b) loan. We've got about $7K-8K cash available to apply toward this purchase. How should we structure our bid to put us in the best position to win??? Our mortgage guy suggested we bid $100 over the list price and ask for 3% in seller concessions. We would then have around 4% total into the transaction but we would be getting a home with a lot of equity in it.

[Ted Larson]

As an agent who works in an office that represents HUD homes and has submitted many, many HUD bids, I always instruct my clients to bid the highest amount they would be comfortable paying for the property. Bid what you can afford and what you think it's worth. In our market (Mpls/St. Paul area), there is a ton of competition on HUD homes. If you have the extra cash, and this is the home you'd most like to own, go big. It also depends on whether you're treating it as an investment that you'll occupy for a year or treating it as your residence. If it's an investment, analyze the deal, do your due diligence and get the comps. If it's going to be your home, and you'd sincerely regret it if you lost the bid, then bid big.

For What It's Worth,

Ted