Frequently Asked HUD Questions - Part I

Because our office is the listing office for HUD houses in SE Tennessee including Chattanooga and Hamilton County, Bradley County, & Marion County, among others, we're much more experienced selling HUD houses than the average brokerage. Just because a Realtor is a licensed agent doesn't mean s/he can sell HUD real estate! There are some key differences between buying a HUD home and buying a typical foreclosure or seller owned home. This series is going to give you a leg up on your bidding competition by having the scoop when it comes to what HUD does & doesn't allow (or require!). Itching to get started and don't need any more information about the bidding/buying process? Click here for a list of available TN HUD homes.

What is a bid period?

HUD homes are listed for a set amount of time, usually around 10 days,before any offers will be considered. At the expiration of that time (the bid period) all offers received from owner occupants will be considered. If an acceptable offer has been received, the winner bidder will be notified and the home is then under contract assuming that all original paperwork is received by HUD within 48 hours of notification. If no acceptable offers are received, new bids will then be reviewed on a daily basis going forward. Any offers received before midnight of a particular day are considered to have been received at the same time.Non-owner occupant offers are not considered during the initial bid period but are considered for daily bids. It is a federal crime to represent yourself as an owner-occupant if you do not intend to occupy the home for a period of at least two years. You have to sign something saying that you understand this and I have to sign something saying that I have explained it to you. Sounds like they take this pretty seriously, huh? Yeah, they do.


Will HUD pay closing costs?

HUD allows 3% (and no more) of the purchase price to be used for closing costs. This amount is already built into the price of the home and an offer for the full asking price which requests this 3% is still considered by HUD tobe a full price offer. If you are offering less than full price or expect someone to be bidding against you AND you don't need this allowance, it is to your benefit NOT to request them as HUD bases their bid acceptance on the actual net to HUD, not just the purchase price.


Will HUD consider a low ball offer?

HUD uses a numeric formula to determine whether or not to accept an offer. So called "low ball" offers will never be accepted except possibly in the incredibly rare instance when a HUD home has been on the market for the better part of a year. If this is the case, the listing will basically say something similar to "All offers considered." Otherwise a low ball offer is nothing but a waste of time. Occasionally, if an offer is very close to what they will accept, and there were no other bids that meet their minimum, they may respond with a decline of the offer but a dollar amount which you can submit the following day that they will accept. Contact me for more information on what types of offers will usually qualify as a winning bid. HUD reduces the price of its listings on a regular basis.The amount of these price reductions is, in almost all cases, 10% of whatever the original asking price was. If you think the price is too high right now, wait a few weeks and check back, they may have reduced it to something more in line with what you feel is reasonable. Keep in mind that many HUD homes sell quickly after price reductions (often the same day) so don't dilly dally if the price is right!