@Joshua Lawrence
I have purchased several HUD foreclosures. Below is a 5 minute education on the key points.
Number 1 rule. Work with a broker that is experienced at submitting HUD offers. HUD is very strict. I once had an offer declined because we missed one check box on the physical contract.
During the time that the properties are listed as "Exclusive" only government agencies, non-profits, and owner-occupants can submit offers. If you look at the listing during that time frame (Usually a week in my market) you will see the count down until it ends. Upon ending if any offers have been received they will all be considered equally. Meaning that the offer with the highest Net to HUD price will win if it exceeds their minimum acceptable offer price.
Once the listing reaches the "Extended" offer period, investors can submit offers. They extended offer period typically ends daily. All offers received the same day are evaluated equally and the highest Net to HUD offer that exceed the minimum acceptable price is accepted.
The Minimum Acceptable Price is calculated by a formula. The formula takes into account if you have a preferred status (Owner-occupant, Non profit, etc...), Day's on market and original asking price.
The more days on market, the less they will accept. Buyers with preferred status can always purchase at a lower price than investors.
If HUD rejects your offer they will often provide a counter offer. They lie to you in the counter offer. For example if a listing started at $100K and is now 120 DOM HUDs MAP (minimum acceptable price) may be 60K. However if you submit an offer at 30K they may tell you that their MAP is 75K. However as you get closer together they will eventually reveal their actual MAP.
Do not be afraid to submit lots of low-ball offers to find where their true MAP is. You are basically negotiating against a machine, you will not insult it.
If you have reached your maximum offer price and HUD does not accept it, your only option is to wait for more DOM.
If you really want the property be sure to check the box that says they can keep your offer as a backup offer. I have had a case where an OO offer fell through and they then accepted my backup offer months later.
There are a few websites out there that will give you their best estimates of where the current MAP of any HUD listing is. In most areas they are relatively close. Just Google the HUD case number to find them.
