Part 2 My HUD bidding strategy.

Real Estate Agent with Gold Key Real Estate

Yesterday my HUD bid was accepted!  My buyers are excited.  If I had bid much less I know the bid would have been rejected.   How you bid for HUD bids depends on many factors. 

1)  What is the buyer willing to bid?

2) How long has the home been on the market?

3) What is the housing market like right now?  This week?  What has been happening with HUD bids?

4) What is the condition of the home?

5) How is my buyer paying for this home?

6) Is my buyer a home owner or an investor?

First I am going to assume your buyer wants the home but does not want to get into a serious bidding war.  One problem with bidding is that it is sealed bids so you do not know how high you have to go to win.   If the market is not going crazy and the house is nice and it is the first day HUD considers the bid I like to bid just over asking price. I mean like $100.  

HUD basically creates a spreadsheet.  The put your offer up then subtract the seller concessions (closing costs, selling agents commission).  Whatever nets HUD the highest net is the one they take.  It does no good to sob to the listing agent.  They have no control.

I made a HUD bid that was accepted yesterday.  Since it is a cash deal I made the offer.  Deducted 3% closing costs and added $100.  This way if someone bid the price with closing costs my buyer would win.  HUD will often deal with 5% less plus closing costs.  They change their price about once a month.  The price change is usually about 10%. .  They have a reserve on each house.  The trick for us is to find the sweet point.

If my buyer is paying with FHA then the appraisal will stand and any difference needs to made up with cash. So if the appraised value is $80K and the buyer pays $100K then the buyer will have to have $20K plus the down-payment.   Ummmm most FHA buyers do not have that kind of cash or they would be going conventional.  A VA buyer will need a new appraisal so a market analysis would be in order. 

The VA and HUD do not play well together.  There is often a repair escrow that most VA lenders will not deal with.  The buyer cannot buy the home with the repairs needing to be made and HUD won't fix them.  I try to steer (not in a bad way) my VA buyers from HUD homes.  This does not hold for Fannie MAE, Freddie Mac or other REO's.   Technically you are not allowed to call a HUD home an REO.  But if it looks like a duck and quacks like a duck it is a duck.

Sometimes my strategy doesn't work but at least my buyers are not entering a bidding war.  Last spring I bid over $15 K over on a nice HUD home and my bid was rejected. 

I get a reasonable number of my HUD bids.  I check the MLS to see what has been happening with HUD homes in my area.  Are they being overbid or underbid?   What is the selling price vs the list price?   If I have been in the home it is especially useful information.  

I have similar strategies for all bidding but this is how I deal with HUD homes. Part 2 My strategy for bidding hud homes.

If you like this post read part 1

Posted by

  Debbie Holmes

Gold Key Real Estate     Company logo

(208)761-2551 Email:

To search Boise Homes visit my website



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