Posted by Dave T on July 16, 2001 at 20:57:40:
List price is the asking price. As is value is HUDs opinion of the value of the property in its current condition.
What HUD will actually accept depends upon how long the property has been on the market. In the first 45 days of the listing, HUD generally only considers full price offers. Once the intitial 45 days has expired, HUD will consider less than full price offers, but you really only have about 6% of the list price as your negotiating room.
Of course, as the proeprty ages on the market, HUD may actually lower the list price. This also lowers the minimum acceptable bid, but the ratios are still the same.
Now I did not go into the mechanics of HUDs actual minimum price, cash equivalent factor, and broker commission and how that affects the minimum bid you can submit. Going with conventional financing, and not HUD financing does give you a little more breathing room. You get even more breathing room if your broker is willing to accept less than a full commission. You use up breathing room if you ask HUD to contribute to the closing costs. If you are really interested in all these details, I suggest that you work with a HUD approved realtor who can explain all the details to you.
To answer your question, the bottom line rule of thumb is: list price during the first 45 days, 94% of list afterward.