Real Estate Home Tours
Can you tour a HUD foreclosure home before bidding?
I can’t see anywhere whether they allow people to inspect the property before placing a bid. I would guess they would, but this whole thing seems so different than normal real estate.
I have made a living purchasing HUD foreclosed properties. Yes you can view them prior to bidding, and no you don’t have to live in them, if you purchase them as an investor.
Let me explain. Go to www.firstpreston.com. They are the listing agent for HUD foreclosed properties as well and Fannie Mae and Freddie Mac. If there is a small, house icon that has HUD on it, then it is a HUD foreclosure. If it is Fannie or Freddie or some other bank it will have a small, house icon with an F on it.
Each property may be listed at Owner/Occupant, Good Neighbor or General/All Bidders. If the property is reserved for Owner/Occupant, then your bid will be declined if you try to bid as an investor.
Good Neighbor sales are reserved for police, teachers and nurses.
If the initial listing for your state shows a specific date and closing time of 11:59 P.M., the listing is not General/All Bidders. If it shows Daily 11:59 P.M. it is usually open to all bidders. You will have to view the particular property listing to know for sure though.
You will have to do your due diligence prior to making an offer. Once you make an offer, and it is accepted, you can’t back out without loosing your earnest money. If you turn the water on, you will have to pay to get it re-winterized.
You will have to pay to have the utilities turned on and/or checked, though HUD has a disclosure of known or suspected problems for each property.
Clicking on the link for viewing more details will allow you to view the listing and see some pictures of the property. If there aren’t too many pictures, the property may not be in good shape. If it has a lot of pictures, then usually it is in better shape.
Usually the property will be listed for the value of the property at the time the loan was created or the value the county/state places on the property, which ever is higher.
Some areas have a lot of competition for the houses, others, like mine, have very little.
I have purchased some properties at 50% to 60% discount. I got one at 70% discount to state valuation. It had problems, but has been a good rental.
You can flip the properties if purchased as an investment and not as an owner/occupant. If you purchase as an owner/occupant, you must reside in the property for 2 years.
Here is a good tip, regardless of what the bidding is reserved to, you can always bid as an owner/occupant, and if it is open to all bidders, then HUD will give preference to owner/occupant bidders.
Also, you can usually offer much less than the asking price as an owner/occupant, and still win the bid.
You can have HUD cover most, if not all, closing costs, including title insurance, terminte inspection (usually they already have a report and have treated for it if some has been found), mortgage and deed registration.
You will have to put $1,000 as earnest money.
Don’t pay cash if you have it. HUD wants the money deposited in their account before they close, and usually that takes a month. That happened to me once, and I learned my lesson. I get a loan, then pay it off early.
I recently purchased a Freddie Mac repo, and the rules there are totally different, and you will get screwed three ways of Sunday. You will have $1,000 closing costs, on top of any your bank may impose. Everytime I turned around I was getting shafted from Freddie.
Good Luck. Hope you are as successful as I have been.
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