Any advice on buying a HUD foreclosure

95XL883 · Nov 19, 2014

Hi all,

I normally lurk here as I am a newb rural landowner. With that said, I would appreciate any experience/advice that any one can give me on buying a HUD foreclosure property.

Here are some background facts. Almost two years ago I bought an ell shaped 40 acre tract. My tract is a 25 acre hay field and 15 acres of mostly woods with a dry and a spring fed pond. (I've made good progress eradicating the Johnson grass and improving the brome stand through soil tests and proper fertilization.) I love the ground and am on it about once a week. There are no structures on my 40 acres except the fence along the road (in place when I bought the ground) and the 1400' interior fence I had installed to mark the property line of my 40 acres versus the adjacent 10 acre tract. (I had the new fence installed to prevent any boundary disputes with the 10 acre tract as the property was in foreclosure and somebody could easily not realize they were crossing from that property onto mine. It is now very clear they are two separate tracts.)

The adjacent 10 acre tract recently went on the market. It is in terrible shape. The land needs a serious brush hogging, after a chainsaw is taken to the 2"+ brush, and that will be hard on the brush hog. It is so weedy, I suspect blanket glyphosate treatments with subsequent soil prep, seeding and fertilization (assuming one doesn't want to look at the scrub and weeds that are taking over.) The shed will need about $5,000 of siding, etc, soon or it will probably fall down in 5 to 10 years. (There is serious rot at the base of the poles plus it looks awful with the peeling rusting sheet metal.) The 1,700 square foot ranch style house is 40 years old and needs serious money. Needed repairs include new plumbing (disclosure has been made that the pipes have failed), new wiring (the small panel is maxed out and what wiring I have gotten to is brittle), new gutters, new windows, structural repairs (the ceiling is severely sagging in two rooms with the roof sagging slightly above one of those problems, new sheetrock, new flooring, new paint and a kitchen makeover. HUD acknowledges the house has less than a 30 year life. How they can ask $100,000 for the property is mystifying. Basically the house is a liability to me. The property has been on the market for a little while and apparently there have been no offers.

I would like the 10 acres to build a barn for my tractor and some equipment. That said, I am about to submit an offer for what I think the land is worth. This will be so far under their asking price, I will be surprised if they don't tell me to take a hike.

If anybody has any experience or advice with HUD foreclosure properties, I would appreciate hearing it. Thank you very much.

Greg

murphy1244 · Nov 19, 2014

I waited till the Sheriffs sale. That said, whatever that means. Lowball them and see what happens.

kenmac · Nov 19, 2014

I believe there is a time period that the house stays on the market just for those that are buying to restore the house and live in it. After that time has passed, it goes on the market for anyone to purchase.. Don't take my word for any of this...... Probably need to talk to a real estate agent in your area. They should be able to tell you what rules that apply, and how to make an offer

Scrambler82 · Nov 19, 2014

I didn't do HUD but did a Fanny Mae Foreclosure on house and 10.5 Acres.
They have a procedure for accepting offers. I low balled by over 100k four months later my offer was accepted.

Good things take time.

Of course I had to increase the tractor size... Too bad, lol.

Low Ball an offer and see the response.

Gary Fowler · Nov 19, 2014

Low ball offers get accepted much of the time by the FEDS. You just have to be the highest low baller. Go for it and wait them out. If not better offers come in, you just may be the highest bidder.

japody · Nov 19, 2014

Are there any comps in the area? If so, use that info to your advantage. Although the assessment for taxes is not always accurate, it too can be used to get you a ballpark idea of what it's worth. Good luck and let us know how it turns out.

WM75Guy · Nov 19, 2014

I bought a HUD foreclosure once, came out OK. If it is a true HUD owned property it first goes up for auction to owner occupants, non-profits, and governmental agencies. Those bids are opened up on a set date each week. If no one bids the asking price it goes to an extended listing where anyone can bid and they open those up daily. On an extended listing HUD may accept less than the asking price.

I outbid the next guy on my house by $50 to get it. The only repair was a new element in the hot water heater where it burnt up. After the owner walked the water was disconnected before the electricity was turned off.

Search for HUD property here.

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mjarrels · Nov 19, 2014

My experence with governments is they buy high and sell low.

mark

newbury · Nov 19, 2014

We bought a HUD foreclosure in the process of retiring in 2010. We needed storage room for gradually moving stuff down to Mississippi where we knew we were going to eventually retire.
But the place we bought had several "quirks" to it.
It was my the same house SWMBO grew up in. Her mother had sold it during the real estate BOOM to a "flipper" who ran out of money. We made 1 offer, far below what it was worth in a depressed market even. But we had cash on hand to close quickly, no waiting around for a loan. We initially had just planned on renting some storage units. The cost of the house IF we had financed it was about what we WOULD have been paying for storage units. According to Zillow it has gone up in value almost 3 times what we paid for it and all I do is mow the grass. Eventually we plan on renting it but SWMBO still views is as her "storage unit".

As far as the OP's situation he needs to view it as buying land and a bulldozer for the house.

95XL883 · Nov 19, 2014

Thank you all. The sheriff's sale was over two years ago. (So much for the gubmint moving quickly, eh?

). The 15 day time period for bidding only by owner- occupants and government entities ended several weeks ago.

I really appreciate the encouragement to make and stick to a low ball offer. That is the way I'm going. I am looking at the house as Newbury suggests, the house is a liability and demolition is most likely in the cards if I do get the property.

As far as comps go, similar properties in good, ready to move-in condition go for $88,000 to $120,000 in this area. The property I'm looking at will take at least $70,000 to get into comparable condition. It is possible a DIY type could buy it and work it back into shape. We'll just have to wait and see who gets it. If it is me, the house will most likely be demolished and I would build a barn in its place. Hmmm? More equipment.:cool2: