My broker, Beyond The Move Realty, was recently awarded the balance of a contract, along with 2 other local brokers, to list HUD-acquired properties in Central Texas. This region spans from the Waco area and down through San Antonio. Agents in my office, and the other two offices, inspect the HUD properties and create a Brokers Price Opinion (BPO) in order to get the property ready to market for sale. Lots of other events happen behind the scenes before that property becomes "Active".
At some point, Southwest Alliance, the contractor for Texas and New Mexico that manages these properties for HUD, gets the go-ahead from HUD to put the properties on the market. The property becomes active in Bid-Select and the Austin MLS (or San Antonio or Waco, etc.).
Once the property is active in Bid-Select, there are normally 10 days for buyers to submit their bids. On the morning of the 11th day, all bids are opened, and the bid that nets the highest amount to HUD wins. There are all kinds of caveats, here. One point to consider is that HUD prefers to award bids to owner-occupants, so an owner-occupant will normally win out over an investor-buyer even if that investor-bid nets more money to HUD.
HUD properties are often listed at the low-end or slightly lower than other properties in the neighborhood, so many buyers are excited to wind the bid and make a great deal that nets some equity upon the purchase. And all though there is no option period allowed in this purchase, buyers DO have a period of time in order to get an inspection of the property. There IS NO NEGOTIATION with HUD on the price of the house past the bid. The properties are all AS-IS.
Are you excited? Are you ready to find a HUD property for yourself?
HUD properties are NOT real-world real estate. However, a lot of the prep you need to buy a HUD property is the same prep you need for most other real estate transactions.
Before you submit a bid to HUD, you MUST have all your paperwork in order. You MUST have your approval letter from a lender OR proof of funds to purchase with cash. You MUST have a $1000 earnest money deposit in the form of a cashiers check. You MUST have a Buyer's Agreement signed with your real estate agent, and NO you may not bid without an agent.
Why all the prep? Once HUD says you have won the bid, you have 48 hours ONLY to get all required documents to HUD (or Southwest Alliance). Keeping you on the timeline is one way your real estate agent earns their commission. Time is of the essence in all transactions, but even more so in a HUD purchase. You are always at risk of losing your $1000 earnest money deposit, whether you have turned it in to HUD or not! And why must you use a real estate agent? Because HUD wants to be sure that you have representation. If the agent is not working for you under a Buyer's Agreement, then the agent is only working for HUD and is not bound to you.
But don't be scared. It may not be real world real estate, but if you follow the instructions carefully and meet your deadlines timely, you can end up with a terrific real estate deal.