Anyone ever buy a HUD Home?

[Judy in IN]

....And how hard was it?

We're looking at one for DD, when she's ready. It needs some TLC, of course.

I've looked at the page, and studied the bids. How do they determine who wins? Is it all about the amount, or whether you would occupy the home?

[DAVID In Wisconsin]

I ocassionally make offers on HUD homes. Never got one. They do often give preference to owner occupants but, the highest bid wins. Bids must be within a certain percentage of the listing price. In other words they won't even consider lowball offers. The HUD homes I've found usually need a lot of work. And they usually seem to be very overpriced (in this area). Around here, HUD homes tend to remain on the market for a long time. HUD homes are periodically reduced in price.

[TurnerHill]

First, let me disclose the inherent bias that I have as someone who buys and renovates homes.

Buying a HUD home is a lot of work. HUD requires all sorts of things be done that are harder and more expensive than you would think (lead paint and radon remediation are the big ones around here). HUD requires licensed contrators do the work. HUD has strict rules about what offers they can consider.

Generally, a HUD house will either be sitting on the market and therefore available to you, or will have a lot of bids.

If it is sitting on the market without interest, that means a bunch of people like me have run the numbers and they don't yet work, at that list price. Or if there are a lot of offers, that means bidding against people like me with lots of experience in the 203k program and the cash to make it work.

Generally, it is not a great way for an average joe to get a home.

By all means, study up and explore your options. But be prepared for it to be difficult.

[Blossom'sGirl]

Our first home was a HUD home and unless they have changed their policy you do not have to have any special contractors unless you want a special loan helping to fix it up. We were confused about this and had the contractors come in and do estimates on all the work they wanted done. I mentioned our frustration to our lawyer about how big the loan was going to be especially since we had $12000 in the bank. He then asked us why we were getting that loan and I told him I thought we HAD to and apparently that is not true. We ended up getting a regular bank loan using that savings as a down payment and we fixed up the house at our leisure. We ended up selling it 10 years later for 3X as much as we paid for it (but we did put a lot of money into it).

It is a good investment if you know what to look for in a house. You also want to watch for mold and asbestos. Buying the house was easy for us because that $12000 was enough to be 20% down and banks are more eager to loan to you when you have that.

[TurnerHill]

Originally Posted by Blossom'sGirl

Our first home was a HUD home and unless they have changed their policy you do not have to have any special contractors unless you want a special loan helping to fix it up. We were confused about this and had the contractors come in and do estimates on all the work they wanted done. I mentioned our frustration to our lawyer about how big the loan was going to be especially since we had $12000 in the bank. He then asked us why we were getting that loan and I told him I thought we HAD to and apparently that is not true. We ended up getting a regular bank loan using that savings as a down payment and we fixed up the house at our leisure. We ended up selling it 10 years later for 3X as much as we paid for it (but we did put a lot of money into it).

It is a good investment if you know what to look for in a house. You also want to watch for mold and asbestos. Buying the house was easy for us because that $12000 was enough to be 20% down and banks are more eager to loan to you when you have that.

It is true that you don't have to get a 203k, even though they try to imply that you do.

But you do have to remediate any known problems, like lead paint or radon, and you need to use licensed contractors to do it.

I do this for a living, and I won't deal with HUD homes any more. Just to give you an idea what a pain it can be.

[TheMartianChick]

I agree with the comments from investors. We also buy properties and renovate them into quality rentals. Anytime that you have to deal with the government for anything, there are extra hoops to jump through and very little wiggle room.

We have found out that it is much easier to purchase foreclosures that are bank owned. They are usually more willing to accept a lower price for the property and don't care what contractors you use to renovate. As a matter of fact, they are so happy to get rid of the property that they don't give you a second thought after closing!

[Judy in IN]

Well! You've given me a lot to think about. I've looked around on the site, and the homes do seem to be higher in some states.

The one I'm considering is under $20K, and has had a lot of work done on it already. It IS in a little teeny town in the middle of nowhere, though.

It will need new plumbing, furnace, hot water heater, and bathroom and kitchen.

If you cover the plaster (old house) with drywall, will that take care of the lead paint?

Or, what else did you do to elliminate the lead problem?

[Terri]

I did, and it was most excellent!

It was sound and livable and on an acre of land. They financed pretty much all of it, so we did not need much up front.

[TurnerHill]

Originally Posted by Judy in IN

Well! You've given me a lot to think about. I've looked around on the site, and the homes do seem to be higher in some states.

The one I'm considering is under $20K, and has had a lot of work done on it already. It IS in a little teeny town in the middle of nowhere, though.

It will need new plumbing, furnace, hot water heater, and bathroom and kitchen.

If you cover the plaster (old house) with drywall, will that take care of the lead paint?

Or, what else did you do to elliminate the lead problem?

The point I have been trying to make is that if the house has an identified lead paint issue, there is nothing that YOU will be allowed to do to eliminate the problem. Unless you happen to be a licensed lead abatement contractor.

You will need to work with a licensed contractor. And that will cost money. There is really no good way to estimate how much money without knowing much more about the building and you area than I do. But for general reference, I have paid well in excess of $10,000.

I've did the remodeling work on several dozen HUD foreclosures. As a generalization, the real estate agent should have a good idea of what bid they'll accept. The guy I did the work for WAS a realtor, bought them substantially below asking price. He paid cash or arranged financing through his bank and paid me to do the work, then relisted the house at top dollar. All this was 10 or more years ago and no doubt it's different now.

[MushCreek]

I've been TRYING to buy one for two years now! There's a mobile next door to our acreage in SC, and we've tried to buy it in three separate HUD auctions. The real reason we want it is to control who lives next door; the price is about what the vacant land would be worth. We keep getting out bid, but for some reason, it never closes. The last time, it was to have closed in February of this year. Guess what? Still hasn't closed! We told our realtor that we have cash, and are ready to close. As back-up bidder, it should have gone to us automatically when the first bidder didn't close on time. No one seems to have any idea what's going on.

[Judy in IN]

MushCreek,

My Dad says it's probably rigged by the Realtors. Who knows?

The Realtor showed it to us this afternoon. It's got some floor issues, for sure.

Nothing in the bathroom except the tub, lol. It's been on the market a couple of times.

He said they have a lead notice just because of the age of the home.

We're making a bid. If we don't get it, that's OK. I just bought another home in Lafayette that needs a roof for $20K.

We have plenty of porjects to do...

[MushCreek]

I guess it could be rigged. According to the rules of the auction, the house has to be bought to be occupied, and the buyer has to live in it, and keep it for two years. In other words- no realtors or investors. Who knows if those rules are actually followed, though?

[Judy in IN]

Mush Creek,

For a certain period of time, that is true. After that, they throw the bid open to anyone.

Check this link:http://www.hmbiweb.com/listings.html

This company lists for 10 states, but you can get to all 50 too. There's lots of information here.

Actually, TurnerHill is right--for the money, I could buy a little house ready to move into, and not much work.

It won't break my heart if they don't accept the bid. I'm bidding as an investor.

The Realtor said that if you bid as an occupant/owner, and are not, there's a $250K fine involved.

[Judy in IN]

Well, we got it!

They only seemed interested in my NOT getting a loan on it, lol.

They have a brochure about lead paint, but it isn't a specific issue with the house.

Looks like another project on the pile.

[busybee870]

try this site
http://www.fanniemae.com/homepath/fi...VE3BJ2FQSISFGA

and the USDA Rural development has home loans too , go to their site.