In the last post on understanding the HUD foreclosure website, I ended by showing you about their listings designated for “Government – General, Owner Occupant”. The basics of this was that HUD tries to encourage owner occupancy over letting properties go to investors. But if HUD cannot obtain a buyer for owner occupancy, it will open up the listing to all bidders, including investors. Now remember, you can bid as an investor during the owner occupant period, it just means that someone who bids as an occupant will have priorty over your bid.
HUD’s “Government – General, All Purchasers” Designation
A Listing that is “Government – General, All Purchasers” is open to all bidders, and there is no contract forcing you to live in the property at all. The assumption is, that you will likely use it as an investment property. Usually, after the first 10 day bid period is reached, HUD will open up the bid to all purchasers, and run a daily bid deadline.
If no one in the community makes an acceptable offer to HUD within about 30 days, HUD will re-evaluate the asking price, and will usually lower, and then put the property back out there under the 10 day (sometimes less) bid period for owner occupants. This process will repeat itself until HUD gets the property sold. I want to note that HUD is extremely successful at dumping properties, so you really have to develop a plan for bidding on potential properties.
Before we move on to developing that bid strategy, I want to present two other designations that HUD will use from time to time. It doesn’t use it very often, however sometimes it will to good neighbors and non-profit organizations. Since this site is about making money in real estate and using technology to that end, I will only cover the good neighbor next door designation.
The “Good Neighbor Next Door” GNND
In revitalization areas, HUD may use its GNND designation. If you are a teacher (pre-k through 12th grade), cop, firefighter, or EMT then you will be particularly interested in this designation. It will allow you to acquire that property at 50% of the listed price, provided that you agree to live in the property for three (3) years. If the property is in a great location, and could be a great rental or flip after that time, it may be something to consider.
So now that you understand the different types of bidders / designations that HUD offers via its website, you are ready to learn how I go about bidding on these easy real estate targets.
So let’s go on to part 3, Bid Strategy for HUD Foreclosures