OfflineSo I've read in Deans books that HUD will accept 86% of the price they are asking if there are no other offers on the table. For those of you that have closed on HUD deals (like Josh who just closed his first)Did you offer below that or was it within that range? The reason I ask is I have come across a HUD house just down the street from me. Its totally falling apart and by far the worst house in the neighborhood FAR FROM the condition of any other house. They have it listed at $210,000. Its being sold sold AS-IS w/o repairs or warranties, states to use Radon Gas & Mold Notice in document package and according to listings, it needs a new roof, has electrical system damage, etc. Just looking at the outside of the property, it has siding falling off the house, everything inside is original (build it 1979) and needs replaced-for example the carpet literally is worn through with huge holes in places, flooring, cabinets, appliances(all not working at all), lighting fictures (some even missing), old gold non transparent windows, and even doors (some also missing all together and others damaged), walls damaged, decks, yard needs major overhaul...everything needs replaced. I am looking to complete my first deal now. Wasnt planning on it being a rehab that I would complete myself or a project needing this much work. Dont know much myself about rehabbing (costs, etc) yet. For all I know it may be better off just to plow the house down and rebuild. But I just cant seem to get this property out of my head and keep thinking that even if its too much for me right now, that I could somehow contract it to someone and still make a profit (and learn about the process-especially the HUD process) or if nothing else give the lead to someone else who is ready for a project this size. HUD has it listed above other newer and larger homes in the area that are updated and in excellent condition inside and out. The TotalViewRealEstate.com estimates it at $203,072 but included in the data listed is homes that are within a couple blocks and FMV of up to and over $500,000. The land value listed by the county (and using 2009 tax info) is $71,200.00 and building is $119,260.00 with a total of $$190,460.00, which Im sure is not given the current state of the property and is not Up to date yet its still below asking price. How do i get a real estimate of the value given the current state on this HUD house? How low will they really accept? Does anyone have any experience and advice with HUD? Also any advice on how to proceed? I know this is a lot of detail, yet not everything needed to proceed with action but thought Id put it out there and see what everyone thinks because I cant see them selling the house to anyone at anywhere close to 86% of their asking price or even of the FMV because so much work or tearing down is needed. Thanks for your input!
HUD house in horrible condition-your input please!
Posted on: Tue, 05/11/2010 - 23:51
HUD house in horrible condition-your input please!
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- by Dobbie30
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We've bought Fannie & Freddie's before & was smooth closing...but Hud has always given us problems; 1st, they prefer owner/occupied over investors to the point they have accepted not only less $ for the property, but have even accept financed offers over our cash offers(because of being investors); 2nd,
they will only drop a small % under asking price, no matter how many repairs are needed...If this is your 1st deal, I would recommend moving on to a deal that will be easier to close, assign, & does not need so much in repairs, especially if you don't have the cash to complete the trans action & repairs.
Take "baby steps", find a FSBO or estate/probate type of sale, it should be easier to negotiate...We just closed yesterday on a 2/2/1 that was listed with R E at $ 58,000, bought for 41,500 ... & it's pristine, no work needed at all ! And best of all, it has a market value of around $ 80,000...Don't get discouraged, just dig in & keep looking...it's better to wait for a great deal, than one that will come back & bite you. Good Luck, Gary & Jill
gceriani-
And good luck on the house you closed on yesterday!
Thanks for your input and the HUD info from your experiences. I have been reading other HUD threads today. And don't worry, I am not discouraged! And I know you are right-there are better deals to start on...just want someone to make money on this one. I'm sure someone more experienced would know just how to handle it. If anyone's interested, the location is Vancouver WA. Can provide details if you want more. Back to working on my "baby steps"
From your description, this HUD house is a poor candidate for a first deal. The house has major renovations needed, likely in excess of %50K. From your description of the needed repairs, consider getting an appraisal and a contractor's estimate of repairs.
Why not take your Hud prospect details to the next NWREIA meeting? They have monthly meetings in Vancouver. Check out their meeting schedule at www.northwestreia.com. You'll get lots of expert advise and guidance from local experienced investors, deal analyses, and you'll meet potential buyers and private investors for your deals. It's a great way to learn, build your local network, and prevent costly mistakes. A deal analysis on this house will help you understand how to cost out a property to determine if it is a profitable deal, and to see what kind of exit strategies would work.
Be profitable.
MSWestLinn
mswestlinn-
Thank you for your input! It is very helpful. I would like to check out your website for some general information. There's a good chance I have already visited it as I have began researching clubs in the area. We'd (my partner Scott and I) love to attend some of your meetings. I was also invited to attend a couple other meetings by members of other clubs. I am looking forward to networking and the opportunities these clubs will bring! How long have you been a member there? And how long have you been investing? I see from your profile you are a wholesaler and do rehabs. Do you attend Vancouver or Portland meetings? Thanks again for your time. We look forward to meeting you. Have a great night!