Posted by Jimmy on January 26, 2007 at 08:07:42:
HUD is one source among many sources. I have bid on maybe 20 properties through HUD, and got one. The one I got was a 4-plex in poor condition.
The process prevents “steals,” so don’t go into it expecting to get a house for 50K which you can immediately turn for 100K. Here;s how the process works in my area (I assume this is how it works in most places).
HUD will have a deal in place with a local realtor to handle all HUD properties in a particular area. That’s the first reason you will not see houses listed WAY under value.
They will set an initial asking price and list the property. For a week or two, only would-be owner occupants are permitted to bid (don’t even think about lying about your intentions. big trouble if you get caught). if no contract, the property is available to all investors for another week or 2. if it does not sell, the asking price is ratcheted down by something like 5%, and the process starts over.
The 4-plex I got was in poor condition. Initially, the asking price was 40K. I tried to bid 20K, but the realtor wold not accept the bid. His hands are tied. He has to use the pricing ratchet process, at least for a couple cycles. By the time the price on my 4-plex had ratcheted down to 28K, they took my bid of 23K.