HUD foreclosed homes

HUD foreclosed homes

Hi all, this is my first post.

I'm looking at a HUD home. It listed at $165k and at 60 days they dropped it to $124k. Question is - if it's still listed at 6 months, how likely would they be to accept a low ball offer if I put one in and no one else has submitted one? I'm thinking of offering $80k, mainly because I can see quite a few repairs I'll have to do and I think the $165k appraisal was definitely high. This is a manufactured home on acreage.

How low will HUD go as they near the 6 month mark where they sell for $1 to nonprofit and gov?

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HUD foreclosed homes

It sounds like they would be highly motivated after 6 months. Is it by the bank? The banks main priority is to get properties off their books especially when it comes time to the end of their fiscal yr. I think you should submit or offer seeing their has not been any other offer. Go for it! You never know what you will get if you don't ask!

They may go that low after 1 yr, but then again they still want to make a profit. However I think it is unlikely they'll go for $1, unless u develop a serious ongoing relationship with the Asset Manager and prove you can close deals. Then just maybe that $1 maybe possible. One thing I have learn and is key to successful investing is forming relationships.

Hope this helps...

Tyeisha


HUD houses

I've been involved in the purchase of dozens of REO's, including HUD properties over the years. I've found the magic number for HUD houses is an 8% discount. I've never lost a bid going that far down.
You have to consider that HUD is not only taking an 8% hit, but they also have to pay commissions and closing costs. That adds another 3-8% to the discount.
They may take the lower offer and I've never been afraid to make that low offer, I've just never heard of HUD going that low. They are usually pretty good at pricing in the repairs. And many times it is listed at 50% of ARV. That's, most times, a great deal.
Something else to consider. You will not be able to assign the contract. REO's & most short sales are not assignable. The banks won't let you. You will have to do a double close or buy it under an LLC with your end buyer on the LLC. He can then buy you out of the LLC for your wholesale fee.
Another tidbit. If you want to buy an REO that is being sold by Fannie Mae, they will not discount the price much, if at all.
As I was told once, by their rep, "We will sit on it as long as it takes. It is no skin off our backs if it doesn't sell".

Good luck,
Jim


The housing market has been

The housing market has been suffering as home sales and home values continue to slide. People aren’t buying houses, but perhaps they would if they could.


The Closed Door Principle

All of the above information and recommendations are very valuable, and to the best of my knowledge are accurate.
There is one factor in dealing with institution owned properties (Institutions are lending institutions and government institutions) that I like to call the closed door factor. We will never know what is going on behind their closed doors. They may have policies, but many policies can be bent or overridden when circumstances favor it. We will never know, for example when an upper level executive circulates a memorandum that indicates that they have far too many properties, and that the front line people should be more open to accept low offers.
So how do we deal with this unknown factor? We make lots of offers, some of them in the "safe" zone based on what other people's experiences teach, and some of them as "test" offers to see if there might be more flexibility.
But ultimately, our obligation is to the buyer of the property, whether that is ourselves in a fix and resell, or a cash buyer on a wholesale. We have to run our numbers on the basis of what they will buy, and remain faithful and firm in doing so. Simple little reminder--"No Buy means No Money!"

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Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall


Matt Larson and Carol Stinson

I know this discussion is mostly about discounted prices with HUD. For those of us who would like a bit more information about making HUD offers, Matt Larson offers some great information on purchasing HUD properties in this week's Weekly Wisdom, Number 272. In addition, I believe Carol Stinson uses land trusts or LLCs, depending on the circumstances of each deal she does.

If it is to be, it is truly up to me.

With gratitude
Patrick


Earnest Money for HUD's

Well I have goten a few deals & I would say yea offer low & see what happens, I dont know how low they will go but I guess you will find out Smiling

I do know from my partner that our 1st deal was a HUD hm & that she told me to be careful about HUD because your EMD can be kept even if there is a mistake on their part by HUD or the co's that sell their hm's for them, for example: if they dont' get the signed purch agreement back in time(according to them, if there is a mistake by their office & our contract was delivered to them but they misplaced it) then they can cancel our contract & keep our emd & there is nothing we can do about it)

I believe my partner signed something to the effect that if anything went wrong even if it was their fault, they could keep our money or emd.

I could be wrong but what you other folks say?

But way to take action though, good job.

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Tony

Go faster do more! GFDM!


Contracts and Foreclosures

Tony, that's terrific inside track type of advice on dealing with HUD and other foreclosures properties.
Foreclosure properties can be very good opportunities; however, that does not mean that they are going to be better opportunities than pre-foreclosure or other properties with highly motivated sellers.
If you are going to deal with foreclosures, then you must accept the downside of dealing with institutions. They do not make decisions from emotion like private sellers. They make decisions by committee.
Also, they are powerful enough that they can set up their own set of rules, which are designed to tip the advantage in many ways to their side. In a private sale, you are dealing with contracts and offer requirements that have been evaluated by the board of realtors and multiple attorneys as being fair and balanced for both sellers and buyers.
I personally prefer to deal with private sellers, and like FSBO properties the best--the closer I can get to a decision maker, the better I like it. There will be those who disagree with me, and that's fine, a diversified world of real estate investing supports all of our various needs, and I really prefer finding properties that are less mainstream than foreclosure properties since the majority of investors are not using a lot of creativity and tend to prefer the passive approach to seeing what their agents can bring to them. I'm REALLY okay with that, it means that I'm going to uncover properties that they will never be aware of.
Each of you will have your own preferences, we wish you all success with whatever path you choose. If you want to find additional ways of finding properties that do not require an agent, read my "51 Ways to Find Properties" post on this forum.

__________________

Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall


foreclosure

Speaking of foreclosure, RealtyTrac's quarterly report on the foreclosure industry indicated that more than a fourth of all domestic property sales during the first quarter of the year were bargains on foreclosure properties. Excessive foreclosures bring down the cost of houses, making industry recover more difficult. The news, considered with last week’s grim jobs report, further supports the realization that the slow economic recovery is not picking up much steam right now. Learn more here.


Personal Economy vs. National Economy

Dharz, thank you for providing some updates on foreclosures and the economy.

We all look at the economy as it relates to us, and I'd like to submit the following as an encouragement to real estate investors.

I frequently quote my first real estate mentor, a very wise man who started investing in 1945, and experienced decades of the ups and downs of real estate investing. He always said: "Fortunes have been made in real estate in good times, bad times, and in between times."

With this being said, I'd like to remind each of you that your personal economy does not necessarily need to reflect the national economy. And that you can look and find opportunity where others do not see it. And, maybe most importantly, you can assist the economy by creating opportunities for others as a real estate investor.

In his first state of the union address of his first term in office, President Obama indicated that it is more the job of business and industry to aid economic recovery than it is of government. I don't think that is "passing the buck," I believe it is a simple acknowledgement of fact. So here we are in business, let's make a difference. Don't look to government to solve our problems, we need to get out there and create the solutions ourselves.

__________________

Dallin Wall
Real Estate Training Team
Forum Blog Location--A collection of my
"Best of" posts:
http://www.deangraziosi.com/blogs/dwall