You won’t find too many HUD homes in Columbus that are available to investors. You need a good strategy to be successful when you compete for the limited number of HUD listings.

Last week one of my investors won a bid on a HUD home that was in fairly good condition, offered at a reasonable price, and did not get offers from other buyers. After submitting a few bids and some back-and-forth with HUD, my buyer won the bid at less than 80% of the list price.

A 20% discount is certainly not the best you can get.

The discount will depend on the original asking price and how that compares to the market values of similar homes in the area. Quite often we see HUD houses offered at a relatively low price, especially, if they are uninsured and cannot be purchased with regular FHA loans. So, you may not need a huge discount from the asking price to make it a good deal.

Here are 3 bidding strategies that will help you get your offers accepted quickly:

1. Make Cash Offers on Uninsured HUD Homes

Most HUD homes available to all bidders are uninsured. This means that they need more than $5,000 in work – or more than 35% of the purchase price. When it comes to cheap homes, 35% is not that much, and you may be able to buy a good quality house at a bargain price.

HUD can’t sell these homes with FHA loans. They know that only a few buyers will go through the hassle of applying for a 203k rehab loan. Therefore, cash offers are best. If you don’t have cash, work with a hard money or rehab lender that can give you a pre-approval letter and close quickly.

2. Respond to HUD’s Counter Offers

In many cases HUD will respond with a counter offer. We suggest that you submit a reasonable, but low offer first – say 65% of asking price. If there are no other bidders, HUD will counter with a number they will accept.

The counter offer HUD sends out is the NET amount they will accept, so you have to add the commissions to the net to get the total contract amount. The buyer’s agent may reduce their commission, if that is necessary to make a deal work.

You do not have to accept HUD’s counter offer. You can submit a lower bid. As these homes are on a daily bidding deadline, you can submit a new offer every day. If there are no other bidders, there’s a good chance HUD will accept a lower offer or continue to counter.

Once other bidders get into the game and offer more than HUD’s counter, you may be out of luck. All bidders get the same counter from HUD.

3. Be Patient and Ready

There are not too many HUD homes for investors. But great deals appear on the market every single month. There is no logic, why some homes are offered at a bargain price and others are overpriced. You just have to watch what’s happening on the HUD home store. An experienced Columbus real estate agent will gladly do it for you.

You have to be ready and pull the trigger when the right deal comes around. Over the past year we had almost new condos offered for less than half of their retail value, we saw a duplex in German Village sell for the price of one of the units, and we found rent ready HUD homes listed for only $11K.

Bonus Tip for HUD Investors

HUD is more likely to accept lower offers on homes that fell out of contract before. Sometimes the relisting of a HUD Home triggers a price reduction as well as a change from insured with escrow to uninsured.

These are the deals where you get the lowest offers accepted.

Always keep in mind that HUD is a motivated seller. They make mistakes occasionally that you can profit from. But they do not give their properties away just to get rid of them.

Last week I alerted you on substantial price reductions on 2 HUD condos. Let me give you an update on what happended over the weekend.

Both condos are now in contract. That was predictable, as the asking prices of these Columbus HUD homes had dropped by more than 50%.

You may be surprised to hear that HUD left $20,000 on the table on the Sowerby condo.

HUD did not accept the highest offer that was submitted over the weekend. Instead, they took the first acceptable offer they received on Saturday.

These homes were on a daily bidding deadline. As HUD does not review offers on Sunday, we did not know, if they had accepted a contract. New offers were flowing in on Sunday. More than 10 in total.

I warned my buyers that HUD may have accepted an offer on Saturday, and that we would not know until Monday. Contracts submitted on Sunday came too late, despite the fact that at least one of them was $20K higher than the one they accepted.

What can you learn from this?

You have to be ready when HUD lowers the price. The first acceptable offer gets the house.

Unlike Fannie Mae, HUD does not apply the Best-and-Final approach to get the highest offer.

“The early bird gets the worm.”

I have good news for you! HUD is catching up and listed 27 new homes for sale this week. Many of these homes are in the suburbs: Powell, Hilliard, Grove City, Canal Winchester, Reynoldsburg, Blacklick, Delaware, Marysville, …
 
Check out the Columbus HUD homes map! You’ll find a really good selection of wonderful Columbus houses this week. Pay attention to the relists (yellow markers on the map). Nike Drive in Hilliard and Retton Road in Reynoldsburg are back.

The other highlight of this week is the large number of bargain properties. 25 homes are listed for less than $50,000. Most of them will need repairs and may be un-insured. But you will find a great deal, if you don’t shy away from a little work.
 
The property on 1750 Bluhm Rd is a perfect example. We featured this home on our blog earlier this week. It’s listed for $45,000 and insured with a repair escrow. Owner occupants need to submit their offer before Sunday midnight. 

Get your Columbus HUD Homes map by subscribing to our email newsletter at the end of this article. Click on the blue button, enter your name and email to send your request and you receive the most up-to-date information on HUD Homes in Central Ohio.
 
Listing Statistics

Total homes available: 65 (last week: 60)

Owner occupants: 50
All bidders: 15
New listings: 27
Relisted/Price reduced: 23
 
Median Price: $60,000 (last week: $65,100)
Average Price: $71,843 (last week: $76,433)
Highest Price: $196,000
Lowest Price: $15,000
 
Homes less than $50,001: 25 (last week: 21)
Between $50,001 & $100,000: 25 (last week: 22)
More than $100,000: 15 (last week: 17)
 
Call me TODAY at 975-9650. Don’t miss out on the new suburban HUD listings! 

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI 
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

This is also true for bidding on a Columbus HUD home. Sometimes you will get a 2nd chance, even if you missed out on your original bid. Here’s how:

Say your realtor submitted an online offer on one of the Columbus houses listed by NHMSI, and you end up the winning bidder. Until the Contract Package is received, reviewed, and ratified, there is no “Contract Pending” and the property is not “Sold.” Remember, HUD requires original documents to be received within 48 hrs after announcing the winning bidder.

Any late or incomplete Contract Package may be rejected and the back-up bidder gets an opportunity to produce an accurate and complete Contract Package. Or, the property may be placed back on the website for other bidders to make offers. NHMS follows HUD directives regarding the sales of all HUD homes. They try to always act in HUD’s best interests.

Can anybody get this Second Chance?  Yes, as long as your Columbus realtor indicates on the bidding screen that you want to be considered as a “back-up” in the event the highest bidder cannot perform.

When do I know? Back-up bids are only valid for 48 hrs and not binding, meaning that you don’t have to accept the offer, if you are no longer interested in the property, or if you have found something else in the meantime.

How do I find out if I got a 2nd chance? Your Columbus realtor will receive a fax from NHMS if your bid is considered for a back-up. There are usually no phone calls or emails. NHMS will give you 24 hrs to make up your mind and decide if you want to accept or decline the back-up offer.

What happens if I decline the back-up offer? By now 48 hrs have passed, so no other back-up bids are valid any longer, and the property will be re-listed for sale at a later time.

What do I do if I want to accept the back-up offer? Your realtor has to sign the form he/she received from NHMS and fax it back within the 24 hr time period. Then the same rules apply, as always: NHMS has to receive an accurate and complete contract package within 48 hrs.  Your Columbus realtor has to indicate on the paper contract again that you want to be considered as a back-up bidder (line 10 on form HUD-9548). 

Wait 3-10 days for a ratified (accepted and signed) contract from HUD and pat yourself on the back. Congratulations, you are the winner now!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI 
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

Columbus HUD homes listings are cyclical. Remember that we had an all time record of new HUD listings last week. This week more than half are either relists or price reductions.
 
Investors watch out! Only 32 homes are available to all bidders, everything else is reserved for owner occupants. Get the scoop on investor eligible properties first thing Wednesday morning on our Bargain Hunters List!
 
It appears that owner occupants write quite a few offers on Columbus houses. This must be due to the low interest rates and very favorable financing terms with FHA loans ($100 down) and the $8000 tax credit for first time buyers. Unfortunately, many of these offers fall through and properties are relisted. Coming out of a very harsh winter, water line breaks are common and many buyers are backing out of their contract after the inspection.

On the other hand investors are buying homes as soon as they are available to them, thereby keeping the inventory of HUD homes for all bidders very low.
 
This Week’s Listing Statistics

Total homes available: 104 (last week: 94)

Owner occupants: 72
All bidders: 32
New listings: 18
Price reduced: 54
 
Median Price: $77,250 (last week: $79,750)
Average Price: $80,281 (last week: $80,708)
Highest Price: $192,000
Lowest Price: $4,050
 
Homes less than $50,001: 33 (last week: 29)
Between $50,001 & $100,000: 40 (last week: 37)
More than $100,000: 31 (last week: 28)
 
 
Call me at 975-9650 to check out the new HUD homes over the weekend!
 

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI 
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

The answers will be different for owner occupants, buyers who are going to LIVE in the property, versus Investors, who will RENT or re-SELL the property.

Owner Occupants

You are bidding on a Columbus HUD home with the intent to make this your primary residence. Obviously, you can only live in ONE house at any given time; therefore, you can only purchase one property. However, you ARE ALLOWED TO BID ON MULTIPLE HUD HOUSES SIMULTANEOUSLY, and you only need to provide your HUD registered Columbus realtor with one earnest money deposit check. In the event that you offered the highest net acceptable bid on two or more properties, NHMS will select which property you will be given the opportunity to purchase. You will NOT be given an opportunity to choose, HUD is assuming that you’d be happy with either one house you placed a bid on.

As an Owner Occupant you are required to live in the property for ONE year, before you can rent or sell it. You may purchase another HUD house 2 years after you bought the previous one.

Investors

As an Investor you are allowed to purchase two or more HUD homes at any given time. You must supply your HUD registered bidding agent with a separate Contract Package and a separate earnest money deposit for each bid. If an Investor offers the highest net acceptable bid on two or more properties, National Home Management Solutions will expect him or her to purchase all of them, or forfeit to HUD the earnest money deposits on the ones not purchased. There is no limit on how many Columbus houses an investor is allowed to purchase from HUD.

Please contact me if you have any questions or want to place a bid on a HUD property!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI 
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650