We found a home we like for a great listing price, but it's a HUD. What should we offer on it? The listing price is pretty low, and our realtor

Asked by U, 55927 Fri Jun 4, 2010

says we should offer more so that we will win the bid. I'm not sure how much more to offer. Is bidding above the listing price normal for HUD homes? How can I ensure we will win the bid?

Help the community by answering this question:

+ web reference
Web reference:

Answers

11
Patrick Howa…, Agent, Edina, MN
Sun Jun 6, 2010
Also be aware that there are no contigencies such as for an inspection or financing on a HUD house. Be sure to do your homework and check everything out before making an offer.

Good luck.

Patrick Howard- Edina Realty
0 votes
Adam Duckwall, Agent, Minneapolis, MN
Sat Jun 5, 2010
I would agree with some of the others who answered before me in saying that you should always do a market analysis prior to writing an offer. You may want the property, however, you don't want to overpay. If you are in a multiple offer situation, you should definitely put your best foot forward if the value is justified. When I say "put your best foot forward", I mean offer the maximum that you would have offered, or negotiated up to if you were not in the multiple offer/bid situation.

If you are not in a multiple offer situation, I would try to get the property for as little as possible. Typically, the HUD home bids are reviewed on a daily basis and winning bidders are then posted on their website. Here is the link to the "best assets" website that handles the on-line bidding for HUD homes in MN. You might need to copy and paste this into your browser. This will show you the current status of the bidding for a property.
http://www.tenmanagement.com/listings/state.do?code=MN
Foreclosure homes in the twin cities area are selling at approximately 103% of list price. I don't think that there is anything wrong with paying over list for a property, however, I would only do that if you think it is necessary. Make sure you use everything in your tool kit to find out as much about this property and the current offer status as possible before you make your decision. If you bid under list with a HUD home, they will almost certainly counter you, no matter what your initial bid is. From what I have gathered from experience, they will almost always counter you at the exact mid point between your initial offer and the current list price. You can probably infer from this how I would make an opening bid if I didn't think I was in competition. Best of Luck! Adam Duckwall (Agent with Edina Realty in the Twin Cities)
Web Reference:  http://www.adamduckwall.com
0 votes
Lenny Frolov, Agent, Brooklyn Park, MN
Sat Jun 5, 2010
Since we dont know all of the factors around your purchase we are all giving general advice. Whatever you do, dont overpay for a property. You may love this house but its not worth overpaying. Speak with your agent about what you and him think would be a competitive bid and go from there. If you get outbid you will be happy later on when you look back and know that you didn't overpay.
Web Reference:  http://www.lennyfrolov.com
0 votes
Brad Anderson, Agent, Maple Grove, MN
Sat Jun 5, 2010
Have your agent do a CMA for you. This will help you deterimine the current value of the home. Make an offer based on that, and not on just trying to get a deal. Good luck.
0 votes
J. Perrin Co…, Agent, Wenatchee, WA
Sat Jun 5, 2010
HUD generally gives more weight to a buyer that is buying to live in the property rather than an investor. Also the price will depend upon a number of factors but I have often found that in the first 6-8 weeks if it is a homeowner buying the average in this area used to be about 12% off of the ask price...not every case though and your agent can really help you here. Remember you don't get something for nothing... forclosed homes often have MANY problems.
0 votes
Susan Hoffla…, Agent, Shoreview, MN
Sat Jun 5, 2010
Dear U, PLEASE listen to all of these agents. So many times buyers think they're going to get a "deal" on these distressed properties. Chances are, the list price you have is ALREADY a deal. If you really want this house, listen to us and to your OWN agent. If you don't want to let it get away, make a reasonable offer that will raise your chances of being accepted. HUD deals generally have several offers on the table to choose from. If you don't get it, as one agent here says, at least you'll know you did your best. I wish I could get more of my buyers to believe me that I'm not trying to pump up my own commission, I'm trying to help them get what they want. So, if they house is already priced below market, the bank or HUD or whoever is most likely not going to entertain a lower offer than that. And, with HUD, the bidding process makes it double difficult. Good luck!
Web Reference:  http://www.homestosellmn.com
0 votes
CCC, Home Owner, San Diego, CA
Fri Jun 4, 2010
Hi, as always, write your best offer. If you lose the (bid) property, you know you wrote your best offer.

Have you ever buy something in Ebay? I am sure you had. I had. If I lose the product I am sure, I did my highest, affordable and close to my price opinion bid.

Good luck.
0 votes
Dave and Don…, , Minneapolis, MN
Fri Jun 4, 2010
I agree with Chris. Your Realtor should provide you with a market analysis of that kind of home in that area and bid accordingly. You may want to consider bidding higher if you really want the house.
0 votes
Christopher…, Agent, Methuen, MA
Fri Jun 4, 2010
Did your buyer's broker provide you with any comparative properties for the home? That would give you an idea of the market value. In my area, I have seen many distressed properties that are located in good areas and are in good condition go under agreement very quickly lately sometimes with a lot of offers. I think that one of the selling strategies is to list it very low and create a bidding war.

It is impossible to know what will happen with this home especially without knowing all the details such as location, property features, and condition. In general though, it is really difficult to "ensure" that you will win any bid. Although, the higher you bid, the higher your chances.

If the home is located in a good area and has a really low asking price compared to other comparable properties, I wouldn't be surprised to see it go under agreement higher than the asking price.

My recommendation is to look at the comps, figure out what you are willing to pay for it, decide on an offer and see what happens. If you get it, great! If not, don't get discouraged as there are lots of other fish in the sea. Good luck!
0 votes
Patrick Thies, Agent, Anytown, IL
Fri Jun 4, 2010
If the list price is lower then what similar homes are selling for, then your agent is probably right. Many times HUD homes are priced to generate multiple offers and push the price up, rather then price it in line with other houses and get low ball offers. What you need to know is would your final offer be in line with what similar homes are selling for. (i.e. don't pay $275,000 for a $250,000 house).

How can you ensure you will win the bid? You can't. You can only hope it's enough and yours is the offer that is chosen. Keep in mind, it's not always about price. Cash is King with these kinds of properties. Non contingent offers are next and then the offers with credit requests and bagage are last.

Again find out what similar houses are selling for. If this house needs work, factor in the repairs on top of your offer. Make your offer accordingly and don't overpay. Good Luck.
0 votes
Anna M Brocco, Agent, Williston Park, NY
Fri Jun 4, 2010
If the property is listed on target for today's market or slightly below, there is a good chance multiple offers will occur--review data regarding recently closed similar properties in the immediate area--factor in how badly you want the property and go from there. Your agent can best advise you.
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more