9b. Important factors to consider
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A bidding process is used to purchase HUD homes. The bidding process takes place online and only an approved real estate agent may submit bids. For this reason, working with a qualified real estate agent is important. Each day, the HUD website lists new HUD listings. For the first 30 days of the initial bidding period, only owner occupant bidders are permitted to make a bid on the home. The general public may submit bids after the first 30 days, which is the point when investor purchasers may make a bid.
HUD often accepts bids that are less than the listing price, but bids that are too low will not be competitive when bidding on HUD homes. While the highest bid usually wins, buyers want to avoid bidding too high or too low. Provided the bid is above the minimum bid, HUD will take the bid that offers the highest net profit to them. Buyers must carefully consider various factors when deciding on a bid amount to ensure they make a bid that is acceptable to HUD.
Why It’s Important to Consider What Bids are Acceptable to HUD
Many buyers are unaware of how important it is to consider what an acceptable bid to HUD is. This consideration is important for several different reasons.
First, knowing what bids are acceptable to HUD and the minimum bid can enable buyers to enjoy the best possible deal on HUD homes. Those who plan to purchase HUD homes are obviously look for cheap homes that provide significant savings. Price conscious buyers can use minimum bid information to acquire a property at the lowest possible price, although sometimes competition may drive the minimum price higher on some homes.
Another reason to consider what bids are acceptable to HUD is to be able to rule out certain properties. List prices are given for HUD homes and buyers can easily use the knowledge of the minimum bid to rule out any properties that may be overpriced, even if the minimum bid is accepted. In many cases, searching for government foreclosures at RealtyStore.com can offer important information on the value of a home available as well as whether it is really a good deal.
Last, minimum bid information is important to homebuyers because offering bids less than the acceptable bid will simply be a waste of their time and the time of their real estate agent. HUD does not accept bids that are less than the acceptable minimum bid and will not counter or negotiate the offers made by buyers
Factors to Consider When Making a Bid
Once buyers understand how important it is to consider the acceptable bid amount, they also need to consider certain factors when getting ready to make a bid. Common questions from buyers include the following:
- What are usual bids on HUD homes?
- How low may I bid on a home?
- What is the property actually worth?
When trying to decide what to bid on HUD homes, several different factors need to be kept in mind:
- The Amount That Buyers Can Finance
- The Home’s Appraised Value
- The Comparable Value of the Home
- The Minimum Bid Amount HUD Will Accept
First, the Amount that Buyers Can Finance must be considered when making a bid on HUD government foreclosures. A lender provides buyers with a loan amount they qualify for; however, buyers need to consider how much they can realistically afford as well. The comfortable and affordable amount buyers can afford should be the cap for the bid made on a home.
Of course, the Home’s Appraised Value is another factor to be considered when deciding what to bid on a home. HUD does an appraisal when they first take ownership of the home, which shows up on the property description. This amount usually helps to determine the initial listing price on the home.
Next, homebuyers must also consider the Comparable Value of the Home when working to come up with a reasonable bid amount. Real estate agents can help provide this information by doing a Comparative Market Analysis on the property, which will compare several previously sold properties in the area that are very similar to the home the buyer is considering. Using this helpful information allows buyers to see what other similar homes have sold for in the area, which is a factor that should influence the final bid amount decided upon.
Last, the Minimum Bid Amount HUD Will Accept should also be kept in mind while deciding on a bid amount. Again, working with an experienced HUD approved real estate agent can be beneficial to buyers. Real estate agents experienced in making bids on HUD homes will be able to help buyers come up with the minimum net amount that HUD will accept. When agents work with HUD homes on a regular basis, they can track bids over time, allowing them to offer excellent advice on a good bidding strategy in the area.
Remembering the importance of the minimum net amount HUD accepts is important. Buyers need to look beyond the gross sale price to consider the net proceeds that will go to HUD when the sale is complete. Sometimes a higher gross sale price may not offer HUD as much in net proceeds as a lower gross sale price will. HUD wants to make as much money as possible, so the net proceeds that go to HUD is an essential factor to consider when making bids on HUD homes.