HUD homes are often a great value. When you add in the incredible financing available, well, you can imagine that they might move like the proverbial flour based breakfast food.
When you see a great deal in the 'real world' (i.e. the one where you can't get $100 down payments any more) one strategy is to offer over the asking price.
SLOW DOWN THERE, PARDNER!
If you offer over the appraised value (which, not coincidentally, is also the initial asking price), and you are planning on using that great FHA financing, you're going to have to come up with the additional money in cash. It can't be financed.
Let's say that you're looking at a HUD house that's listed for $100,000. You know that it's a great house and you want to make absolutely sure that your name is the one on the winning bid on that fateful morning. You decide that you are going to submit a bid of $105,000. Sure enough, the strategy works and your agent calls you up to tell you that it's yours for the taking. They also (if they know what they are doing) are going to ask you for a bank statement showing that you have at least $5,000+ squirreled away. OK, if they really knew what they were doing they would have asked you for that before they even submitted the bid. The point is, you can't get a new appraisal to justify your new price.
On the other hand, if you are looking at a HUD home that's just had a shiny new price reduction, you can offer over the asking price and still get financing for the full amount, just make sure to keep it under the initial asking price (which is also the appraised value).
Good luck and happy bidding, kids!
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Originally posted at Chattanooga HUD Homes
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