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#346277 - 08/03/10 05:56 AM Bid over asking on HUD property, now in trouble.......
MArealtor Offline
Veteran Member

Registered: 12/28/06
Posts: 904
I bid over the asking price on a HUD foreclosure. There are many reasons I did this. The main reason: I think the house is worth it. Prior to the property coming on the market, I was very familar with the home. I knew it had many upgrades and was in (generally) good condition. My plan was to get an FHA loan and make the home my primary residence. Well...I made a big mistake. As it turns out, the HUD appraisal is 15% below my Offer. According to my mortage broker, if I want to go FHA, I must use HUD'S appraisal and I must "make-up" but the difference. Bottom line, the downpayment I need is much more than I thought and I am not sure I can handle it.
Do I approach the assest manager and tell her the situation? Do I bail out on the home inspection? Try to re-negotiate after the home inspection and bring the price down to level I can handle? Any advice out there?


Edited by MArealtor (08/03/10 05:57 AM)

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#346279 - 08/03/10 06:33 AM Re: Bid over asking on HUD property, now in trouble....... [Re: MArealtor]
ech0es Offline
Member

Registered: 05/14/09
Posts: 135
Loc: FL
HUD owned property being pursued for more than 15% over appraisal.

Tell me excactly what you have on lines:

3 of the HUD contract:

4 of the HUD contract (and all section included detailed):

5 of the HUD contract:

6a of the HUD contract:

6b of the HUD contract:

8 of the HUD contract:

Notice to Purchaser Addendum to Sales Contract: HUD's appraised value: Offer in the amount of:


You can PM me with the details if you wish ... I'll try and help you fix it so you don't have to cancel the contract or lose your deposit ... if you didn't lose it already ...

BTW: before you do all of that disclose on my PM ... I need you to understand that I am not a lawyer or your real estate agent, and I am not giving you legal advice or real estate advice !!

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#346292 - 08/03/10 10:13 AM Re: Bid over asking on HUD property, now in trouble....... [Re: ech0es]
OverTheEdge Offline
Veteran Member

Registered: 08/24/08
Posts: 1008
Loc: Middle of Ohio
MA - the most important thing to make sure the AM knows - an FHA appraisal will stick to that property for 6 months. The only prayer they have for selling it for more is if they get a cash offer or a conventional. Anyone trying to buy with an FHA loan must use that appraisal no matter what mortgage company/bank the buyer uses for a loan - the FHA appraisal pops up and must be used. I have had this conversation with a loan officer - she told me that you are not "required" to make up the difference under FHA loan guidelines. If you do not feel you can not swing the "difference" make the call to the AM and have the appraisal conversation and see if she can reduce the purchase price to the appraisal price. She may or may not reduce it - she may wish to cancel the contract and put it back on the market. If you insure that she understands the appraisal sticks - she is more then aware the most likely buyer will need FHA - she may just reduce the price for you and move to close. Its 50/50.
_________________________
"No cause is lost as long as there is one fool left to pursue it". Wil Turner

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#346322 - 08/03/10 03:26 PM Re: Bid over asking on HUD property, now in trouble....... [Re: OverTheEdge]
northtxbroker Offline
Major Contributor

Registered: 05/18/07
Posts: 1864
Loc: Texas
You're probably going to be out of luck. The properties are listed at the HUD appraisal, and lenders are required to use the HUD appraisal if a buyer is going FHA on a HUD purchase. The appraisal is valid for 6 months.

Disclosures are given everywhere to beware of this situation. It is in the purchaser's rights and responsibilities and, more importantly, in the Guidebook for Real Estate Professionals that agents are supposed to read before submitting offers. It is very unlikely that they will lower the price to the appraisal, but good luck.

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#346335 - 08/03/10 04:27 PM Re: Bid over asking on HUD property, now in trouble....... [Re: northtxbroker]
trev230 Offline
Member

Registered: 03/10/09
Posts: 44
Loc: Charlotte, NC
Northtxbroker is right about the appraisal disclusers HUD issues. I used to sell a lot of HUD properties. Use the inspection contingency.

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#346525 - 08/04/10 07:33 PM Re: Bid over asking on HUD property, now in trouble....... [Re: trev230]
ky realtor Offline
Major Contributor

Registered: 04/21/05
Posts: 1879
Loc: kentucky
Check to see if it qualifies for the $100 downpayment that some states have. That should help some. i have sold several of these $100 down homes. As to the inspection contingency, I have never had anyone that was successful in getting their earnest money back due to an inspection.
_________________________
Comments made are my opinion, and not intended to be legal advice of any kind.

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#346578 - 08/05/10 02:53 AM Re: Bid over asking on HUD property, now in trouble....... [Re: ky realtor]
ech0es Offline
Member

Registered: 05/14/09
Posts: 135
Loc: FL
Originally Posted By: ky realtor
Check to see if it qualifies for the $100 downpayment that some states have. That should help some. i have sold several of these $100 down homes. As to the inspection contingency, I have never had anyone that was successful in getting their earnest money back due to an inspection.


HUD is very diligent on returning escrow deposits to buyers that have a legit reason to cancel the contrat based on inspection results, but if the buyer failed to follow the terms of the contract during the period that they are under contract, HUD will not refund escrow. Simple as that.

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#346606 - 08/05/10 08:02 AM Re: Bid over asking on HUD property, now in trouble....... [Re: ech0es]
MArealtor Offline
Veteran Member

Registered: 12/28/06
Posts: 904
Well, after looking at all options, I am going to go conventional. I can make it work. The bid results were posted and there were many bids. I just barely won by a couple thousand dollars. So, I get the house I want, at a price I believe is good. So, you live and learn. I am coming out if it with what I wanted.

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#346655 - 08/05/10 03:51 PM Re: Bid over asking on HUD property, now in trouble....... [Re: ech0es]
ky realtor Offline
Major Contributor

Registered: 04/21/05
Posts: 1879
Loc: kentucky
Originally Posted By: ech0es
Originally Posted By: ky realtor
Check to see if it qualifies for the $100 downpayment that some states have. That should help some. i have sold several of these $100 down homes. As to the inspection contingency, I have never had anyone that was successful in getting their earnest money back due to an inspection.


HUD is very diligent on returning escrow deposits to buyers that have a legit reason to cancel the contrat based on inspection results, but if the buyer failed to follow the terms of the contract during the period that they are under contract, HUD will not refund escrow. Simple as that.


Not in my neck of the woods. I have contracted several that have tried and failed, to get escrow back, and with very good reason, the inspection. To date, I have never had a buyer get escrow returned. (I have sold over 100 HUD homes)
_________________________
Comments made are my opinion, and not intended to be legal advice of any kind.

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#346663 - 08/05/10 05:06 PM Re: Bid over asking on HUD property, now in trouble....... [Re: ky realtor]
northtxbroker Offline
Major Contributor

Registered: 05/18/07
Posts: 1864
Loc: Texas
HUD treats its purchasers differently. I've had escrows returned, but it is not often. Here's how it goes:

1) For investor purchasers, HUD does not consider inspections to be a basis for canceling a sale and getting earnest money back. If the property is an uninsured sale, the buyer forfeits the earnest money regardless of the reason to close. If the property is insured, the buyer can get a 50% refund if purchaser is determined to be an unacceptable borrower. Otherwise, they lose 100% of the earnest money. So, if you have an investor putting earnest money down on HUD homes, they are more than likely going to lose it if they don't close.

2) For owner occupants, earnest money will be returned for a death in the family, illness, loss of job, purchaser is not an acceptable borrower, can't obtain financing on uninsured sales despite good faith efforts, and any other reason as determined by your M&M contractor. With regards to home inspections for owner occupants, if the inspection finds a major defect not previously disclosed, HUD elects to not repair it, the purchaser gets the inspection and contract cancellation forms delivered to HUD within 15 calendar days, then HUD will return the earnest money. Major systems (according to HUD) are roof, structural, plumbing, electrical, sewage, HVAC systems, and non-compliance with codes, zoning, or building requirements. It's not likely that an inspector will find something in those categories that HUD has not already disclosed.

All of this is disclosed in the myriad of forms HUD has a purchaser sign.

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#346737 - 08/06/10 12:58 AM Re: Bid over asking on HUD property, now in trouble....... [Re: ky realtor]
ech0es Offline
Member

Registered: 05/14/09
Posts: 135
Loc: FL
Originally Posted By: ky realtor
Originally Posted By: ech0es
Originally Posted By: ky realtor
Check to see if it qualifies for the $100 downpayment that some states have. That should help some. i have sold several of these $100 down homes. As to the inspection contingency, I have never had anyone that was successful in getting their earnest money back due to an inspection.


HUD is very diligent on returning escrow deposits to buyers that have a legit reason to cancel the contrat based on inspection results, but if the buyer failed to follow the terms of the contract during the period that they are under contract, HUD will not refund escrow. Simple as that.


Not in my neck of the woods. I have contracted several that have tried and failed, to get escrow back, and with very good reason, the inspection. To date, I have never had a buyer get escrow returned. (I have sold over 100 HUD homes)


The escrow sits with the listing broker or the buyer's broker and all the broker needs to do is ask HUD if they agree to let them release the escrow back to the buyer. As long as the Brker is following through with the paperwork and documetation required for cancelling the deal and getting the escrow back for the buyer there should be no problem in getting the escrow back as long as the buyer has a legit reason and performed based on the contract up to that point and in his pursuit of getting his escrow back.

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