As I have mentioned previously, finding an investment property at a discount can be tough, however bidding on a HUD foreclosure is extremely easy. But the question is, do you understand just how easy it is to find and bid on one of these properties? Do you know how the HUD system works, so that you can utilize it to maximize the benefit to you, while minimizing your buy in costs? Well that is exactly what we are about to talk about today here at RealEstateGeek.net.
The Ease of HUD’s Bid Select
You can go to your realtor, or check the MLS yourself (if you have access to it), but the best way to find out about HUD properties in your area is to check HUD’s online repository at http://www.bidselect.com. This is a real time site that updates you about a particular property as soon as something happens to it. But first thing’s first, how do you go about finding properties? Easy, just click on the button that says “Search Properties”, fill in as little or as much information as you would like into the presented fields, and click search.
Now, a nice feature that you are presented with in bidselect is the ability to have a free account with them. Inside this account you can save searches that you typically run for properties in your area, and also can add particular properties to your watch list. I found the watch list tool of particular interest when it came to finding out what a property sold for when I got out bid, or was waiting for the price to come down.
The Typical Life of a HUD Foreclosure on Bidselect
Here’s how it generally works on bidselect: a property comes up as a new listing, and HUD will place it under “Government – General, Owner Occupant” for a period of 10 days. This gives adequate time for exposure (which stinks, because a good investor looks to bid quickly, before anyone else has the chance) and to acquire several bids before the bid deadline. Now, you will have to have your realtor place a bid for you, but as long as you get your bid in before the deadline it will be considered on time, and will be weighted equally with all other bids. HUD sells to the highest bidder, and does not care if your bid was the first one received.
Now what does “Government – General, Owner Occupant” mean? It simply means that HUD will give preference to a buyer that intends to live in the property. Be clear on this before you proceed, HUD will require someone who bids the property as an owner occupant to sign an agreement saying that they will live in the property for at least 12 months. Furthermore, you cannot bid another property as an owner occupant for an additional 12 months after the occupancy (for a total of 24 months from time of purchase). Bear in mind, just because HUD gives preference to owner occupants during this bid period, that does not prohibit you from bidding as an investor. If no one else bids, or everyone else bids as investors, you have just as much chance to win the foreclosure in this scenario as at any other time.
In the next post, we will continue learning about the HUD website, how it works, and how you can use it to your benefit. So go on to Understanding the HUD Foreclosure Site Part II