Larry Goins goes over the process of bidding on properties for HUD Homes.
Learning the How-To on finding, bidding, and finalizing HUD Home deals can get you a high percentage off the list price for markets nationwide.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level.
And now, let’s meet today’s expert host.
Larry: Hey, this is Larry Goins and welcome to today’s REI Classroom where I’ll be your host. Now today’s topic, I’m really, really excited about it because we’re going to be talking about something that I know a lot about, and that’s HUD houses. I’m the guy who wrote the book on HUD houses, how to buy HUD houses at 50, 40, even 30 % of list price. It’s called “HUD Homes Half Off.”
Mike: This REI Classroom real estate lesson is sponsored by AceBusinessFunding.com
Larry: Now, many people don’t know this but HUD is an auction. That’s right, HUD is an auction, and HUD is a daily auction. It’s not like it’ll be out there and it goes for a week or two weeks or 20 days or whatever. It’s a daily auction.
Now, let’s start with the basics. Go to HUDHomestore.com. That is the national website where every HUD house is available in the whole United States, at HUDHomestore.com. Now, once you go to HUDHomestore.com, you’re going to see a big map of the United States. You can click on a state, then you can narrow it down by county, city, number of bedrooms, number of baths. The other neat thing is that you need to know about HUD is when HUD lists a property initially, now they’re all listed through realtors, but initially when it goes on HUDHomestore.com, the property is only available to owner occupants for about the first 15 days. Now it used to be the first 30 days or so, but most markets now it is the first 15 days.
So what you want to do is you want to select on the page for investor, investor properties, unless you are looking for a house to live in. So once you do that, you get a whole list of the properties. Now what you need to do is do a bit of due diligence and analysis upfront. Once you do that and you determine exactly how much you want to pay, then you need to have an agent, a licensed real estate agent, with what’s called an NAID number. That stands for National Identifier Number. Now once you do that, you find that agent and they are going to submit your bid for you. And the cool thing is with HUD there is no negotiating. There is no back and forth, there is no on the phone, it’s all done on the computer.
So your agent submits the bid. Once they submit the bid, putting in their NAID number, which by the way all HUD houses, they have what’s called a case number. It’s not listed by address or legal description, it’s by case number. So they enter in the case number and your bid amount. Now there is a box there that you need to check. Leave this offer open as a backup. That way if they reject your offer now, but they accept someone else’s and then come back later, the other person maybe couldn’t close, they might accept your offer as a backup.
That is a great way to get a few extra deals throughout the year. So once they submit your bid, all the bids end at midnight Eastern Time, I believe it is. I’m not sure, don’t hold me to that, but I believe it’s Eastern Time. So the next day what will happen is, is one of three things will happen. Nothing happens, that means they simply rejected your bid. That’s it. They rejected your bid. Or they could send you a counter-offer. Maybe you bid $50,000. They might counter at $70,000. Now if they do counter you can do one of a few things. You can accept their counter, or you counter back, or you can simply submit a new bid, or you can do nothing. Those are the four things you can do if you get a counter.
The third thing which is what we really like, that’s when they send an email to the agent that submitted the bid with their NAID number, and they said we’ve accepted your bid. Once they accept your bid then they send all of the paperwork with that acceptance that needs to be signed by you, the buyer, and you have to send in your deposit check. Now your deposit is going to be one of two amounts. If the purchase price is $50,000 or less, it’s $500. If it’s over $50,000 it’s $1000. It is as simple as that. It doesn’t get any simpler than that. But you only have two business days to get your bid in. So remember weekends and holidays don’t count. So if you’re brand new at this, if you are a little nervous about it, only submit your bids on Thursday. That way you submit a bid on Thursday, they accept it on Friday, you have Saturday, Sunday, and then Monday, Tuesday to get your deposit in. That gives you a chance to go out and look at the house.
So I’m Larry Goins and you can get more information at LarryGoins.com or if you would like to get a free copy of my HUD book, go to FreeHUDBook.com, and thanks a lot and I’ll see you next time.
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