We recently place a 3% increase on a HUD home listed at $100,000, and appraised for the same. Our agent insisted we bid higher to get it so went $3000

Asked by dsp_smith, Atlanta, GA Mon Jan 20, 2014

Is $3000 higher enough, or should be bid more to be safe?

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6
Carlos Ather…, Both Buyer And Seller, Bristol, CT
Sat Feb 1, 2014
I am currently buying a HUD home and closing on the first week of March 2014.
I only offered $500 above asking price and no need for their paying my closing cost, and got the highest bid since most people were offering listing price or less.

If the house is in a choice community with great schools and the other homes are selling for much more, then I would offer as high as $5051 over asking price and no closing cost help.

Have your realtor do a CMA (Certified Market Analysis) within 1 mile from your buying area.
Also, use http://www.Crimereports.com to see if there are any issues around the house.
0 votes
Segun Ore, Agent, Alpharetta, GA
Tue Jan 21, 2014
Demand is definitely more than supply that price range in most area of Georgia. Most of my current bids start at $10,000 over or more. With that I will say I only have about 60% success in the past few months.
If you like the property and you have the cash to cover the overage I think its wise to go higher. It will also depend on some other factors like how much you ask for in seller paid closing cost.
0 votes
Thank you for your detailed response Segun, turns out we lost the bid :-( Yep I guess $3000 over wasn't enough. We won't know how much we lost by until it's ended but I'm guessing the bidder must have outdone us by several thousand. This was our 1st time bidding or making an offer of any kind since getting our preapproved mortgage 2week ago. Now we've just gotten our feet wet, we'll take from the experience and apply our knowledge it to the next one.
Flag Tue Jan 21, 2014
Marc D'Angelo…, , Roswell, GA
Tue Jan 21, 2014
Dsp_Smith you need to make sure your finances are in order. With HUD homes if you plan to use FHA financing the appraisal has already been completed and must be used. If you made an offer of $3000 over asking price you would need to cover the overage of $3000 and your upfront Mortgage Insurance Premium in cash it cannot be financed into the loan. I do offer a 97% loan that is not FHA that you can use to avoid this. Feel free to contact me anytime I am available 7 days a week and after hours to meet your needs.

Marc D’Angelo
Mortgage Banker
678.442.3405 Office
678.985.6834 Fax
404.925.8291 Cell
mdangelo@brandmortgage.com
apply online: mdangelo.brandmortgage.com
0 votes
Marc, our pre-approved loan is conventional, and offered to us by a Credit Union. It's $120,000 @ 3.89% over 15yrs. A deal we'd find difficult to match anywhere. So we are happy with the offer we have. Given it's a conventional loan, does it mean we won't have to pay whatever we bid over out of pocket? The bidding ended and it turned out our bid wasn't enough. I just wanted to know if we should've bidded higher or stay as close to the listing price. It was our first time, so now we know 3% is enough, we'll bid more on the next property we find with Hud. Thanks again.
Flag Tue Jan 21, 2014
Dustin Luce, Agent, Moreno Valley, CA
Mon Jan 20, 2014
Good Evening,
I am a Listing Broker of HUD Homes in Southern California. The general rule of thumb on HUD Homes is no matter what price you offer on a HUD, you will pay the difference in cash if the appraisal comes in low or have the option of cancelling. They do not re-negotiate the price after your appraisal comes back.

For FHA buyers- the FHA appraised value is disclosed to you up front and if the appraisal is 4 months old or less, you must use that appraisal. In your scenario, overbidding would mean you will bring in the difference.

For Conventional and all other types- the FHA appraised value is disclosed. However, you will need to get your own appraisal once you are in escrow. This could go either way for you. You may end up with an appraisal that meets your offered price. Or you may end up short in which case you would bring the cash difference or cancel.

Always work with your agent and lender in figuring out what is best for you and if you have the wherewithal (funds) to cover.

Hope this helps.

Dustin Luce
0 votes
Thank you Dustin, yes it was very helpful. Well we are taking a gamble in hoping an independent appraisal will show the property value is more and not just at the price HUD appraised it for. Which by the way has over $9000 listed in broker and closing cost fees. Thereby the real property cost seem to be less than the $100,000 it has listed. Our Credit Union offered us a conventional loan of $120,000 however they will only pay 85% of the entire cost. In other words a property appraised at $120,000 but sold for $102,000 or there about, will guarantee the full payment by the Credit Union. So we are hopeful we'll fine a property with at least 15% equity in it already that way we won't have much to deal with by way of up front payment.
Flag Tue Jan 21, 2014
Rodney Mason, Mortgage Broker Or Lender, Atlanta, GA
Mon Jan 20, 2014
That is a question that only your Buyer's Agent can accurately advise you on.

Are you aware of HUD's policy on overbidding if you are obtaining an FHA mortgage? Do you have an extra $3,000 to bring to closing? If not, please contact me for more information on it before you get into something that you cannot close on.

If you are looking to purchase a property, working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your mortgage options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com to get started.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203(k) Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes
Mason, our pre-approved loan is conventional, and offered to us by a Credit Union. It's $120,000 @ 3.89% over 15yrs. A deal we'd find difficult to match anywhere. So we are happy with the offer we have. Given it's a conventional loan, does it mean we won't have to pay whatever we bid over out of pocket? The bidding closes tonight, just wanted to know if going in higher is smart, or if we should stay as close to the listing price as possible.
Flag Mon Jan 20, 2014
Michelle Mil…, Agent, Woodstock, GA
Mon Jan 20, 2014
I agree with the previous comment. Trust your agent! If you are obtaining a loan to purchase the home, please be prepared to pay the difference (out of pocket) between the appraised value and the sales price. I don't know of any lenders that will lend more than the appraised value.

Best of luck!!!

Kind regards,
Michelle


Michelle Miller
ABR®, REALTOR®
RE/MAX Town & Country
Direct: 404-538-5396
Fax: 678-264-5596

What people are saying:
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0 votes
Hey Michelle we lost the bid :-(( I guess $3000 over wasn't enough. We won't know how much we lost by until it's ended but I'm guessing the bidder must have outdone us by several thousand. This was our 1st time bidding or making an offer of any kind since getting our preapproved mortgage 2week ago. Now we've just gotten our feet wet, we'll take from the experience and apply our knowledge it to the next one. I take it this is the end of the line with the property right?
Flag Tue Jan 21, 2014
Best of luck to you! Let us know how it turns out!
Flag Tue Jan 21, 2014
Thank you for the info Michelle. Our agent informed us that our bid was now sealed. So even if we wanted to increase it, we couldn't. Hope for our sake our offer was good enough. Hope it won't be long now.
Flag Mon Jan 20, 2014
It's definitely a good sign that sales have come in that much higher. I would contact your agent if you are concerned. He/she can best advise you.
Flag Mon Jan 20, 2014
If your banks appraisal comes back less than the sales price, then yes, you will have to pay the difference out of pocket. I'm sure your agent has advised you based upon the comparable homes that have recently sold in the area. Most other types of sellers will come off the sales price based upon the buyers lenders appraisal (and the appraisal contingency made part of your contract), however HUD/Fannie/Freddie typically do not (based upon my experience), which requires buyers to pay the difference out of pocket. This happens quite a bit with multiple offer situations.
Flag Mon Jan 20, 2014
My lender - a credit union, has offered us $120,000. They also request that an appraisal be done first. So even though Hud appraised it for $100,000 my lender requires for an independent appraisal be done separately. My husband and I are hoping it will appraise for more, given it was last sold for $160,000 3yrs ago, and all the other homes in the subdivision are sold for $120,000 and above. So you're saying we will need to pay the $3000 out of pocket?
Flag Mon Jan 20, 2014
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