We are getting ready to close on our first SFR which was a HUD home (not a REO). But I wonder if some banks might operate with a similar formula so I thought I'd post it anyway.
I do know that on HUD homes, HUD will accept 87.5% of the asking price as their NET in the deal. I had heard this amount from multiple people who deal with HUD homes so when we found a HUD home we liked nearby, we made an offer for 87.5% and it was accepted:
ASK: $50000
OFFER: $43750 (87.5% of ask) + $1312.50 (commission for my agent who found the house) + $1300 extra* = $46362.50
* We wrote into the contract that HUD will pay $1300 of our closing costs (hence the extra $1300). As long as their NET meets the minimum they take it. So we got to finance $1300 in closing costs for what, a few bucks a month?
I also was told (but have not tested this out yet) that once the house has been on the market a while and they've dropped the price, the 'formula' gets more complicated, but I'm not sure if that's true or not.
Marc
I do know that on HUD homes, HUD will accept 87.5% of the asking price as their NET in the deal. I had heard this amount from multiple people who deal with HUD homes so when we found a HUD home we liked nearby, we made an offer for 87.5% and it was accepted:
ASK: $50000
OFFER: $43750 (87.5% of ask) + $1312.50 (commission for my agent who found the house) + $1300 extra* = $46362.50
* We wrote into the contract that HUD will pay $1300 of our closing costs (hence the extra $1300). As long as their NET meets the minimum they take it. So we got to finance $1300 in closing costs for what, a few bucks a month?
I also was told (but have not tested this out yet) that once the house has been on the market a while and they've dropped the price, the 'formula' gets more complicated, but I'm not sure if that's true or not.
Marc
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