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Overbidding on a HUD home – what Macomb County MI buyers should know.

May 22nd, 2012 · 2 Comments · tips for home buyers

Have you looked at HUD homes lately in my area (Macomb County MI)?   If so you have probably realized that many of them are in really good shape, and priced well!   Because of the condition and price we are starting to see many of the HUD homes sell for more than asking price.    Bidding wars for homes in the Metro Detroit area are now extremely common, and HUD homes are no exception.  Here are a couple of things to keep in mind when viewing HUD homes and if you are considering making an offer:

You may overbid, but if you are using an FHA mortgage you have to bring the difference between the asking price and your bid price to closing.  (Example:  HUD home asking $100,000 and you bid $105,000.  If you are the winning bid, you must bring an extra $5000 to closing.)

Ask your buyers agent about the bid deadline:   HUD homes are bid on through an online system.  There is a bid deadline in which HUD collects all bids and sets a date in which they will review all bids.  The first round of bidding is for those who intend to owner occupy the home, not investors.

Ask about any repair escrow needed for the home.  Most HUD homes will have a property condition report attached to the listing information.  In this report (and any repair addendum) you will be able to see if a repair escrow is needed for that particular home before you can obtain FHA or VA financing for the home.  Ask your agent to go directly to HUDs website for our area and look for those documents for you.  You should review them carefully before submitting your offer.

Purchasing a HUD home can be a very good purchase for many of my home buyer clients.  Being prepared with all the information you need before submitting your bid is the key to a successful purchase!

 

Kris Wales – A partner for your real estate needs in Macomb County MI
SEARCH homes for sale in Macomb County with MLS provided data
Contact Kris Wales – 586-536-5453 cell

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2 responses so far ↓

  • 1 Mike_looking in Michigan // Dec 30, 2012 at 2:04 pm

    Hello, I’m a looking to buy a HUD home and was thinking of bidding a bit much over the asking price ( I need to find a home!) I have already been approved for a FHA loan way above of what I was thinking about bidding. My question is. If I bid 20k over asking and win. Does that 2ok get added onto my loan amount??

    Thanks!

  • 2 Kris Wales // Dec 31, 2012 at 6:36 am

    Good morning Mike,

    No. You will not be able to put that extra 20K on the loan. You have to bring the difference of the asking price and your over bid in cash to closing.

    Here is a link to the FAQ on HUD homes with the question /answer (scroll down to the 6th question):

    http://portal.hud.gov/hudportal/documents/huddoc?id=preo_faqs_10-24-12.pdf

    Also, ask your buyers agent to give you a copy of the HUD purchase package for you to review. One of the documents you will be signing is called “Information about over bidding”.

    Good luck on your home purchase!

    Kris Wales

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