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How to Buy a HUD Repo

By Jeanette Joy Fisher

Most HUD Homes are initially offered on a ten day priority basis to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period, unsold properties are then available to all buyers, including real estate investors. All owner-occupant offers received during the 10 day exclusive listing, are considered to have been received simultaneously. Owner-occupant bids will be opened and reviewed and the highest acceptable net bid to HUD will be selected. Bids will be reviewed and posted at 1:00 PM at the conclusion of the 10 day exclusive listing period. In our area, new HUD listings post online late Thursday night or Friday morning. New "Daily's," homes previously sold which fell out of escrow, post Saturday morning. Properties not sold during the bid time stay listed as daily's. Bids, due by the following Tuesday at midnight, must be submitted by a real estate agent who has completed HUD registration. Don't waste your time using an agent who is not familiar with selling HUD homes. Any mistake causes the bid to be rejected. In order to be valid for the period, bids must be completed and confirmed on the Internet. Don't use an agent who says you must bid way over minimum bid. Find an agent specializing in HUD homes who wants to work with you on YOUR terms. Many bargain HUD homes do sell for far more than the minimum bid. Hold out for the one property which doesn't get way overbid. (We bid $40,000 under minimum on our second home owner-occupant mountain cabin.) How to Make a HUD Bid Rely on your gut instinct and don't let your real estate agent unduly influence you. It is not a difficult process for your agent to make a computer bid. You need an agent willing to make a few bids to get a successful bid. This is like winning a lottery, with the odds in your favor. HUD bids must have a lender's loan commitment statement. Lenders unfamiliar with HUD requirements also waste your time. Any mistake causes you to lose the purchase. Not all lenders understand HUD's bid, finance, and purchase process. When placing a HUD bid, raise your offering bid to cover some of your closing costs. This means you get HUD to pay your closing costs and save out-of-pocket expenses. Also, the higher sales price impacts the market comparable sales in your favor for sale later. Your purchase price influences the values of the market area. Keeping prices higher for active sales during your renovation time protects your earnings potential. Don't get attached to one particular property. We placed a bid on a home I loved in Apple Valley and lost it by a few hundred dollars. The house came back on the list later, not at all uncommon for HUD repos. But, by this time, we had already purchased a better distressed property. You may need to expand from your home area to find a HUD repo. Even in Southern California, we occasionally get HUD repos in outlying areas like Barstow. (If you haven't been to Barstow lately, you may be pleasantly surprised.) If you live in Indiana, you will find no shortage of HUD repos to bid on. Copyright © 2006 Jeanette J. Fisher  Foreclosure REO Real Estate Investing Business Plan Get all the tools you need to start your real estate investing business.   Return to Real Estate Investing Articles

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