Posted by Mike on July 16, 2001 at 21:27:56:
A rule of thumb I follow is HUD properties don’t make good investment properties. To answer your question:
A bidder can ask for up to 5% closing help from HUD, They BLB usually get 1% or less. Now the RE agent can get up to 5%. So if you make a full price offer (100%)
it is only a 89% NET TO HUD. THis is the figure HUD looks at in picking the winning bid, The Net to HUD.
Or what’s in it for me.
I usually don’t bid on HUD properties for investing because the good ones get over bid and it is hard to find at least 30% equity in them. They do exist but you have to be quick. Now if you wnat to hold onto the house long term like a L/O or something then it might work better for you, but for flipping HUD’s are hard to find, for me at least.
Don’t let the RE agent tell you what to bid!! They have to put in the amount you want and although 89% is usually the lowest HUD likes to take they do go lower and even lower.