Bidding on a HUD home in Northern KY? New info you need to know...

By
Real Estate Agent with Exit Realty

When a HUD home comes out on market, the asking price is usually the FHA appraised value of the property.  Lately, we are starting to see an exception to this norm in the Northern KY area, so buyers will need to be on alert!

When viewing the property on the main page of the official HUD website at www.hudhomestore.com, you will need to note what is listed in the "AS IS" section on the main page.  If the price here is noted as "$0", then chances are that the listed price is HIGHER than the FHA appraised value!  Let me repeat that, because this is the real news....if the price listed in the "AS IS" section of the main page on HUD's website is noted as "$0", then chances are that the listed price is HIGHER than the FHA appraised value!

In order to find out the current FHA appraised value, you will need to look up the "property condition summary" report on HUD's website. (It would be good to start doing this for all HUD homes just to make sure of the actual appraised value.)  Look towards the bottom of this report and you will find the amount noted with an "AS IS" value. This is the number you need to know before you bid on the property.

So why is this important to you, the buyer?  Well, as I noted in my previous blog about overbidding on HUD homes, some buyers in our market will try to edge out the competition by overbidding the amount listed in order to secure the winning bid.   (We often see overbidding on these highly desirable properties.)  That means that any overbid amount the buyer offered is now above and beyond the appraised value of that property.  The key here is that the lender cannot lend more than the property is valued at, so guess what?  The buyer is left to bring the total amount of the overbid in cash to closing so as to bring the total back down to the appraised value!  Tough hit if your overbid was $4,000, but even more of a hit if the listed price is higher than the appraised value!

The key here is to know what the actual FHA appraised value of the property is BEFORE you decide to bid, especially if you will be overbidding as an FHA buyer.  If the property is listed at $120,000 and you overbid by $4,000, you may think that you will need to bring the $4,000 in cash to closing to settle back to the appraised value.  But if this is one of the newer properties where the listed price is NOT the appraised value, than you may be bringing a lot more to closing than the $4,000!  Some buyers simply do not have enough cash to compensate for their overbid, even if they are taking advantage of the great HUD program which offers the property at $100 down.  (Note that earnest money is additional.)  If the buyer cannot come up with the cash, then they will fall out of the deal!

So now you know!  Watch your overbids even more closely now in the Northern KY area.  Know exactly what the FHA appraised value really is BEFORE you bid, because it may NO LONGER be the same as the advertised sale price!!!

Proceed with knowledge and be empowered to make the right decisions in all your real estate transactions. 

_______________________________________________________________
NORTHERN KENTUCKY Real Estate Sales - Cathy Miles Realtor®
CINCINNATI, OHIO Real Estate Sales - Cathy Miles Realtor®

I specialize in helping buyers & sellers with their real estate needs in Northern KY and in
Cincinnati, OH . With passion, I invite you to board my boat for your next destination and
allow me the opportunity to help you navigate the ever changing currents of this incredible
market!

just ask cathy...513.673.7726  cathy@mileshometeam.com          

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Topic:
Home Buying
Location:
Kentucky Boone County
Tags:
northern ky homes for sale
boone county ky homes for sale
hud homes for sale in northern ky

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Rainmaker
125,300
Mary Ann Daniell Realtor
Coldwell Banker United, Realtors - Subsidiary of NRT LLC - Killeen, TX
Delivering Successful Results Since 1999

Always learning on Active Rain.  Thanks so much for sharing this info on HUD homes.  We work in a market dominated by no money down VA loans and cash is short among our buyers!

Aug 19, 2013 04:03 AM #15
Rainmaker
1,543,435
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Well here in IL we have those 2 reports right on the bidding site so you can see what the appraised value is. You are correct that some listing agents don't know what they are doing & 'forget' to mention that.  When they do, you could put your buyer at risk because anything over that appraisal price is extra $$ the buyer has to come up with. 

I just looked at one that closed that I lost out on where the listing agent was very confused about the value. Anyway, that one closed $30,000 above the starting bid price.  Most of the poor buyers were going FHA & definately did not have that kind of extra cash.

Aug 19, 2013 04:46 AM #16
Ambassador
1,726,157
Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional

Oh wow, I need to double check that here because I have not seen a HUD home listed for over the FHA appraised value but I will now be alert to that fact.

Aug 19, 2013 05:11 AM #17
Anonymous
Cathy Miles

Richard - You are right......in the past we never saw a HUD home listed OVER the FHA appraised value.  I have one HUD listing that went up on HudHomeStore recently for $94,500.  The "AS IS" value was not listed on the main website property page.  In the property condition summary report tab, the "AS IS" value was listed at $90,000!!!  So if the buyer bid at the asking price of $94,500, he would already be $4,500 overbid.  If that buyer was an FHA buyer, he would have to bring that overbid in cash to closing.  Oh my! 

Aug 19, 2013 05:49 AM #18
Rainmaker
922,313
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Kathy...Thanks for sharing this with us all.  These are things that I needed to know.

Aug 19, 2013 10:55 AM #19
Rainmaker
565,466
Jordon Wheeler
The Jordon Wheeler Group - Fairburn, GA
J W Group Real Estate Sales and Service

Hi Cathy,

Thank you for sharing!  To piggy back off of Richard's comment, I have not seen this phenom in the Georgia listings, but there is a LOT of change happening with HUD right now.  I will check some new listings to see if we are engaging in this same activity in Georgia.  Best of GREAT success to you allways!

Aug 19, 2013 11:44 AM #20
Rainmaker
1,317,551
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

I learned so much from this post.  Thanks for explaining how all of this works with a HUD home.

"The buyer is left to bring the total amount of the overbid in cash to closing so as to bring the total back down to the appraised value! "

Aug 19, 2013 12:19 PM #21
Rainmaker
4,432,217
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the information. I will bookmark this and share it with others.

Aug 19, 2013 09:14 PM #22
Rainer
215,727
Robert Hicks
United Country River City Realty - Savannah, TN

Do your research-Know your market-Get the deal done.. Thanks for sharing..

Aug 19, 2013 10:42 PM #23
Rainmaker
495,611
Terry McCarley
REMAX Realty Team - Cape Coral FL - Cape Coral, FL
REALTOR, SRES, CDPE - Cape Coral, FL

Thanks for sharing this.  Buyers need to work with an agent that can guide them thru the process of purchasing a home without overpaying and this post tells me you are totally on top of things!

Aug 20, 2013 12:06 AM #24
Rainer
146,223
Theresa Akin
CORPUS CHRISTI REALTY GROUP - Corpus Christi, TX

Thanks for sharing. Hate when buyers low ball an offer only to find out they weren't even close. This is good to know since we are not informed when classes for HUD come out. This is one of those "What HUD doesn't want you to know"

Aug 20, 2013 12:34 AM #25
Rainmaker
687,550
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Wow ... I didn't know this was happening. I'll start paying closer attention to the HUD homes that are on the market in my county. Thanks Cathy!

Aug 20, 2013 03:12 AM #26
Rainmaker
1,431,210
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

Well that is an interesting change.   I will watch for it when I do HUD Homes around here.  Most homes are selling for over asking.

Aug 20, 2013 03:23 AM #27
Rainer
94,777
Mark Wheeler
Roots Realty - Portland, OR

Another thing to watch out for is that the HUD sale contract no longer says the owner occupant buyer can revoke their offer and receive their earnest money back if they revoke withing the home inspection contingency period. There is vague mention of a 15 day inspection period, but nothing says the buyer gets their earnest money back if they unconditionally disapprove of the inspection(s). See the 9th page of the 25 page owner occupant sale contract. It does say they may receive their earnest money refund "For other good cause, as determined by HUD." A buyer needs to have a bus load of faith that HUD will do the right thing if they revoke; I do not share that optimism. Call me a skeptic.

I would love to be explicitly proven wrong on this by the way! Investor buyers are specifically told in the investor sale contract that they will not receive their earnest money back if they revoke.

Great topic & information, thanks!

Aug 20, 2013 04:40 AM #28
Rainer
479,689
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Interesting information and excellent advice about buying HUD homes..

Aug 20, 2013 08:46 AM #29
Rainmaker
370,463
Travis "the SOLD man" Parker; Associate Broker
iXL Real Estate-Wiregrasss\ - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

Good info on the "over-bid" tactic. I haven't heard about that one yet.

Aug 20, 2013 01:17 PM #30
Rainmaker
843,657
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Thanks Cathy for a great post and all the new info.

Aug 21, 2013 06:00 AM #31
Rainer
137,484
Aaron Smith
Keller Williams Advisors - Edgewood, KY
Northern Kentucky Agent & Investor

This is great info Cathy. I have had buyers want to bid over asking price on HUD homes and the lender says they can't. Now I know exactly how to find out what they can/can't bid. See you around.

Aug 21, 2013 09:02 PM #32
Rainer
227,067
Ed Vogt
Midwest Properties of Michigan - Grandville, MI
Grandville, MI Midwest Properties

I'm so glad I read this...working with a couple of HUD buyers and did not have an opportunity to attend a HUD class last week.  Thanks for the info!

Aug 25, 2013 11:37 PM #33
Rainmaker
1,181,060
Adrian Willanger
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience

Hi Cathy, some great HUD information, I'll certainly go to the HUD website for more information. Thanks for the links. 

Mar 05, 2014 12:28 AM #34
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