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It’s HUD Day…. Can I really buy a government home for $1 ??
May 18th, 2007 categories: Real Estate News
It’s Friday morning….this is HUD day. HUD day? yup…every Friday morning you can log onto the local HUD representative’s web site and see all the properties our friends in the government have released for bid. These are properties the government now owns as a result of the foreclosure process.
You are thinking…Hmmm…maybe a chance to snatch up a bargain, because the government can be clueless, and you’ve heard that this is a way to purchase a home for pennies on the dollar ?? Ummmm….the answers are possibly, not as much as you think, and probably not. There are definitely bargains available, but you really have to be careful and pay attention to true market values. I personally have seen and purchased great values. But I’ve seen terrible deals (at least from an investor’s viewpoint). So don’t assume that because it has the words “foreclosure” or “government-owned” that it is a bargain.
You can get a good idea of market value on a neighborhood by going to the local tax records. Here in the Charlotte-Mecklenburg county area that is available online. A better way is to get you a good realtor who can look this up for you. We real estate agents have access to the same information plus our local MLS. We can get you dead-on information as to true market value of a property. Give me a call and I’ll be happy to discuss the specifics in more detail (and no, I’m not going to charge you or otherwise make you feel pressured to work with me, so relax….).
How does this darn HUD foreclosure process work? Here’s a good overview with a few details:
a) of course, first thing, unfortunately, someone has lost their home because they did not pay their mortgage company. The mortgage company had loaned the owner money and the government guaranteed the bank they would get their money. Well, it didn’t work out very well, so the government had to pay the bank, and the government took over the home in order to recover as much of their money as possible.
b) now the government has legal possession of the home, they have to sell it in order to get their money back (or as much of it as possible). They sell these homes through a bid process managed by the department of Housing and Urban Development (HUD). For a government-run process, it’s actually a pretty darn good process.
c) So, every Friday morning a new batch of homes is released to the public for bid. Details of these are available online. The first little catch here is that for the first ten days after being released for bids, only persons who plan to actually own and live in the home can submit a bid. So any of us interested in one of these for investment purposes, have to sort of sit back and cool our heels a little. I like this rule. The HUD folks are in the business to help persons live the dream of owning their own home. This gives them a slight advantage. Ok..so in this ten day period, the HUD folks collect the bids. Nothing is decided until Monday after the tenth day. Monday morning, they open the bids and accept the bid that gives them the highest “net”. If no bids meet their minimum acceptable bid, then the home is released to everyone for bidding at which time investors can enter the process. At that point they receive bids each day and evaluate those that meet their minimum. They then will award the person with the highest net to HUD the right to purchase the home.
d) Once you find out that you have won, you have to get moving. There are several documents that make up your winning bid package. You have to have this package along with your earnest money deposit in their hands within 48 hours. This forces you to send this in via Federal Express or one of the other overnight delivery services, or drive over to their office and deliver it in person. The office is near I-77 and Tyvola.
e) The process to go from you winning the bid to making it legally yours can be a test of patience. This is where is feels very “government-like”. You have to close in 45 days or risk losing the deal (some exceptions are available), it’s easier to use their attorneys (don’t fight it), don’t argue any required forms (you are wasting time and energy), and don’t expect quick responses to any questions.
In the end, no matter if you plan to live in the home or are an investor, the process can be a great way to find a real value in a home. I’ll post Brian’s HUD faqs in an upcoming blog.
And, like you will always hear me say…”give me a call or drop me an email. I’d love to chat with you to answer any questions..” and I will follow that with my other favorite statement “I’d be honored to have you as a client, but no, I’m not going to charge you, harass you, or otherwise pressure you if you contact me..”