Bidding on HUD homes can be like stepping into a Bear trap?

HUD homes are aka HUD foreclosures and are sold by M&M contractors. If you are looking to purchase a "HUD Home" your agent will put a bid together with you to called a purchase agreement. The home has been appraised and a value set. Do you need to offer that full price or can you offer something else? 

Of course you ca offer whatever you want offer. The Bear Trap is if you decide to offer more than the asking price. All that you bid ov

er the asking price will be money you have to bring to closing over and above your 3.5% down payment. That is correct. If your home is $100,000 and the down payment is 3.5% you would pay $3,500 down. If you offer $110,000 thinking you will only put 3.5% down or $3,850 you will have a rude awakening because your down payment will actually be $3,500 + 10,000 or $13,500. 

Don't step in or on any Bear Traps, it will bite you. If your agent bids on a home for the "good neighbor program" there is no commission paid by the seller either. Your agent needs to bill for their services rather than let it go. You, the client, will be paying for the commission.Lets take it a little farther... you are a teacher, law officer, or EMT and you know you get a 50% discount for buying select HUD foreclosed homes.. so you bid $125,000 on a home that had an appraised value of $100,000 knowing you are going to get that bid discount.... NOT! Your discount applies ONLY to the $100,000 appraised value so you get the home for $50,000 with a $1,750 down payment PLUS you must now put an additional $25,000 down in this scenario. 

How do you use this to your advantage? Make an offer that is within your pocket money over the asking price. If the home is listed at $100,000 or   $99.900 you might offer $100,100. That way you have extended yourself $100 and when they look at a dozen full price offers you came out on top... Yahoo!