You probably wonder how low you can go when you submit a bid for a Columbus HUD Home. There is no easy answer, as HUD does not publish their acceptance guidelines. I researched a few HUDhomes that sold recently to give you an idea about the discounts they accept.
It appears that the final purchase price depends on how soon offers are submitted. Owner occupant offers are usually much closer to the original listing price (appraised value) than investor bids. If offers fall through (which happens quite frequently) and HUD had to reduce the listing price they become very motivated. Sometimes they even drop the price so low it creates a bidding frenzy among investors.
Let’s look at a HUD listing in Delaware. HUD accepted a purchase offer of $32,502 on 12/22/2008. Here’s the HUD house: 80 N. Liberty St, Delaware, OH 43015.
The history of this listing began on 7/28/08 when the HUD house was appraised for $70,000. This was also the initial listing price for owner occupants. It seems that owner occupants did not bite, so it opened up for investors. The earliest list date that produced a “lowball” offer of $20,000 was 10/3/2008, which was not accepted.
The house was re-listed a number of times. On 11/21/2008 HUD dropped the list price to $49,000. Almost exactly one month later they accepted bid for $32,502. All together 28 offers were made on this HUD house, before they accepted one.
The number that really counts for HUD is the net purchase price, which was $31,502. The difference, in this case $1,000, pays for commissions and closing costs. The net price of $31,502 is 64% of the last listing price of $49,000. The net price HUD accepted for this listing is only 45% of the as-is appraised value. It appears that this buyer got a really good deal.
Don’t be shy when you submit an offer! But you should also be realistic. HUD will not give away a property immediately, but they will discount Columbus HUD Homes significantly when they receive many low offers and the property sits on the market for a while.
Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Specializing in HUD Homes, Shortsales, Investment Real Estate