Q: My question is about HUD foreclosure homes. I have been watching the HUD listings in my town. Recently, a property that had been previously listed for $59,000 was foreclosed on by HUD and relisted for $21,500.
My sister put in a bid as owner occupant for $1,000 over the asking price. She offered to pay cash.
She was informed today the bid was lost and a real estate investor purchased the home for $1,000 less than our owner occupied bid. It seems odd that the property was marked down by $38,000 and was then sold for even less to a real estate investor when an owner who would have occupied the property offered $2,000 more.
You seem to know the market of real estate. I was just wondering about all these government foreclosures. Are all these government entities cheater home buyers and simply stuffing their pockets with gold?
A: Thanks for taking the time to write. The scenario you describe sounds very different from the automated process by which HUD homes are supposed to be sold.
HUD homes are properties that were financed with FHA loans that went bad. FHA forecloses on the property and it becomes a HUD home. HUD contracts with companies across the country to manage the sale of HUD homes online.
I’ve been told that buyers who will use the HUD home as a primary residence have a two-week lead over investors when it comes to bidding on these homes. I wonder if your bid was placed correctly online.
Supposedly, only HUD-certified real estate agents can place a bid for a HUD home, on behalf of a buyer or investor. But, some agents may be better at it than others.
It’s possible that the agent your sister used didn’t work the system as it was intended or there were other forces at work. You can search through the pending sales to see which agents are listed the most often, and which agents represent the winning bids. This is one way to find an agent with the most experience with these types of homes.
But it’s also possible that the winning bidder said he was going to live in the property as a primary residence but in fact plans to rent it out. I don’t know how you get around misrepresentation like that, but it would be worth following up to find out.
I’d investigate further. You can always file a complaint with the local HUD office.
HUD uses the “net” bid, which is the bid after closing costs the buyer asks HUD to pay and real estate commission. HUD will accept the highest net bid, unless they have some valid reason to reject the bid. After the initial 13 day owner occupied bid period, the bidding is opened up to both owner occupied and investors equally. Your sister may have bid $22,500, but may have asked for closing costs and real estate commissions which could have totalled as high as $2300 (can vary a little by market), making the net bid $20,200. The investor may have been a licensed real estate agent and not asked for any commission or closing cost. That would mean their bid of $21,500 was also a net bid of $21,500. In this case the investor net bid was higher than your sister’s net bid, therefore they won the bid. I personally think it sinks that owner occupied bidders are put at a disadvantage because the real estate commission is counted against their bid. HUD really needs to change that.
I am currently in the same boat as your sister, and I really believe that HUD is just trying to cheat its own system. We placed an offer on a HUD-owned property during the initial owner-occupant exclusive bidding period. Since the house is in an uninsurable condition, this exclusive period was only 5 days, per HUD guidelines. Our bid was recieved halfway through the bidding period, but instead of accepting our offer, HUD declined to comment on it, hoping to get higher offers during the extended all-bidder period, keeping our owner-occupant bid (over the asking price, by the way) as a backup in case they didn’t get more from investors.
What’s the point in having an exclusive owner-occupant bidding period if you’re not willing to sell the property for more than the asking price. After this, our second bad experience with HUD (they lost another property we had been interested in offering on for over a year), we won’t be doing any more business with them, and will be pursuing an attorney to deal with this issue. HUD is trying to cheat buyers and cheat its own system, all to make more money for themselves.
I am also in the same boat. there was a hud hud home in my area selling for 9,000 and i offered 12,100 and today i was informed that they rejected my bid and is now open to investors. I dont know what happen and why they wouldnt except my offfer but i do know that they were lots of people bidding on the property and none were excepted.
My daughter is buying an “as is” HUD home in Florida. The real estate agent said no need for a lawyer as cash deal and she can handle all the papers. I realize you don’t have all the info on this deal but any general comments? I live in NY so don’t know FL ways.
I think it is a joke and the realtors are in on it. In Fargo, all the Hud homes are getting picked up by the investors and flipped for profit!! We too tried to buy one and bid for over their asking price…it’s a joke! Beware people!!
I got a better one than all you guys,I bid $ 12,400.00 above the asking price & fair market value,Hud sends my agent a bid award notice,then 5 days later rejects the offer, & yes this was a house we were going to live in,were going conv finciancing,have the money in the bank to make all repairs & pay down the difference between the appriasial & sellling price,along with a credit score of above 800.
Now I rebid with the same dollar amount & because it’s Sunday,won’t get a answer until Monday morning ! Waiting to see what they do next & Yes we really want the house to live in.
I have been with my daughter and realtor looking for a house for 6 months. We have bidded, but have been out bidded so many times for about 15K. Who has that type of money to compete with besides investors?
Sunday we bidded on a house and got the sucessfully submitted confirmation number. We called on Tuesday (Monday was a holiday). We were told that the bid was opened on Friday and awarded? Huh? I am placing a formal complaint to HUD.
I recently submitted a bid 2.5% over the listed price on day one of the seven-day owner occupied only period, which I was notified by my HUD-certified agent was not accepted at the end of the seven days. I’m now reviewing the public sales records that show the sale closed at the original list price. I intended to live in the home for the foreseeable future and am well qualified.
My question is: what recourse do I have?
Is it even worth it to see if the (local) HUD administrator showed favor to the lower bid than mine for whatever reason? Has anyone ever filed an official complaint and got anywhere with it?
Hud is a Joke. I made a cash offer $5000 over a Investment company and that was Net to Hud. It seems that the Hud and Hud homestore is making preference to minority and or company over other people. This was in a older community so the HUD that says they care about peoples rights and conditions are going against what they say and do. I will make a complaint with the attorney general in florida and then go from there. Why have a bidding process when the higher bidder is suppose to win when you take a lower offer. this is just plain dishonest and the hud homestore and HUD should be sued for fraud , misreprsentation violating peoples rights
I documented the fact that i submitted the offer and i have the paper work and date. I seen the other offer and how much lower price it was and it is a Investment company. A lady from HUD ( not the hud homestore and there private companies like pemco and other etc. The lady from HUD thought it was strange that Pemco – Hud homestore took the other offer and she was talking with me over the phone when she was looking at the same property and said that she did not even see my offer. She wanted to know what i wanted and i said first that i wanted someone to be honest with me. However the Hud homestore did say in writing that they did get my offer. I went through the listing agent that was listing the property for the Hud Homestore. As i stated before this is in a older community for older people. Now i want to know who will compensate me for my loss. Have you heard of Banks and other people taking a lower offer when there are multiple bids on homes. Then this is the answer to the question. It is not heard of to take a lower offer as this is why you have bidders in a bidding process. One company can not make there own rules and brake the rules of a bidding process. this is very dishonest and deceiving to have people bidding when they know how the system works and if you put in a higher offer , cash offer , net to hud offer what ever then it is good common sense that that higher offer should in fact be the winner. This was in late 2016 so now in January 2017 i will file my complaint with the florida attorney general. I want to be compensated for my loss even if i have to retain a lawyer and to file a petition i will do so. It is very sad that HUD would allow this kind of bad behavior to favor investment companies over someone who plans on living on the property and in an older community for older people. I do not know how long i have to live as i was told more than 4 years ago that i have a bone marrow disease and i am a senior citizen older than 62. I do feel and i do believe i was discriminated against on several counts. I did and followed the proper procedures and i did go through the listing agent for the Hud Homestore. I want to see how a judge and jury will look and how they will think about this type of behavior and business practices. There need to be more transparency and regulation and someone to monitor these online auction companies. They should be fined and sanctions imposed along with jail time for bad practices and procedures.
I put a bid on a home following the 85 88 percent rule the offer was then countered to all the bidders so we went near full cost with closing because every home in this area that is hud ussually sells for 50 thousand or less. We were informed everyone bidding was low balling so we went almost all out…. no still waiting on the bid to close we need this house its perfect for us. I dont understand how we got countererd the list agent wouldnt call me back so i had to find another realitor to even help us. Crossing our fingers but by yalls comments i feel way less confident and its stressfull waiting like this they did this right before a weekend they were on a 24 hr bid period before we submitted our offer then they upped there bid period like they were mad we offered so much.