Hud Repo Selling For More Then Its Worth!
Perhaps some one can enlighten me on this:
I was keeping my eye on a Hud Repo. Owner occupied bidding period ended last night. It was listed at 148k. I ran the comps with my realtor, and they came in at 165k for a home in decent condition. When we inspected the property, we came to a conclusion that at least 30-35k worth of work will need to be done. Home was used as a meth lab, and everything is pretty tore up.
I was sure it wouldn't sell the first round, but when I checked the bid results today, it sold for a full price!!! What gives?
I would buy it for around 100k, but full price with at least 30-35k worth of work???
I had a number of people in the construction business give me estimates to fix the place up (my experience is very limited), so I am reasonably sure of what it will cost to fix the place up. So why would anyone get it for 148K when the value is only 165? Am I missing something?
Any insight would be helpful. Thanks.
You must remember that when HUD gets a property they list it out at the full amount of the unpaid bal on the loan and all costs of foreclosure and if they are still a little low they come up a bit to cover costs of sale etc. Their staff appraisers appear to be appraising as instructed.
The game plan is to bid what you think is correct and if you do not get it wait for it to drop and each time the sale has held and they are short they will continue to relist and it will go down.
I would not give up yet, wait a bit the sale may fail as the new Buyer gets a good look at the work that has to be done. Most people hate to spend money on fixup and then with no profit. It does drive one to strong drink.
Also a Meth lab. Are you sure you want to play in an area in which such an activity could run for a period of time undetected? They are a little smelly and hard to miss during their operating times.
Another item which may have occured is that the present bid may have been made by someone instructed to bid and gain control of the property and then reinstall a similar type of business. They have a saying that where better to place a new lab then on the debris of the old one. The one spot the Feds er Locals would never think to look.
My feeling in the matter is that your could do better in your area just checking the Probate files, or Divorce Actions, or signs of any family upset. Of course there are always preforeclosures. My favorite is the Public Administrators Office. You know the ones that take over properties if someone died without a will or a Conservatorship blooped, or the interplay of a family are so intense that the court had to appoint them to handle the property until the gunfire subsided.
Of course you have to buy a few lunches, and have a few drinks and listen to failed lawyer talk, but wot the hell it does make money. Besides, every now and then a really profitable goody comes down the road and if you are standing there ready to roll and dole, you get it.
Cheers Lucius 8-) 8-)
My guess is that you're right on and that whoever bought it is perhaps missing something.
Perhaps someone who is handy bought it for themself as a primary residence, can do the work himself, and still thinks he got a great deal. Many [lay] people think that getting 2K in equity is getting a good deal (...but we know better).
It might have been a new investor that didn't do his due dilligence. If your curiosity gets to you, look it up and give the new owner a call. It's also possible that they saw something in it that you didn't. Potential to build, rezone, sell to the right buyer, etc.
HUD houses in our area go for ridiculous prices as well, we dont bother even attempting to bid anymore. I just follow the listing/bidding/relisting action on the website for amusement purposes.
In 2001 we bought 2 HUD houses, both with a good amount of equity built in. One was a 1000 s.f. townhouse, listed at $45k, we got for $42k plus did $6k of rehab work (all ourselves so saved a ton), FMV at that time about $78. Second was a 1200 s.f. townhouse, FMV at time of sale about $95k, listed at $91k, we bought for $75k and spent $2500 on paint and carpet and had a signed lease before we even went to settlement.
Fast forward to 2004.........same townhouses in the first example are going for $98-100K on HUD bids, well over the listing prices. Example #2, FMV right now is about $130k, there have been 2 listed just within the past couple weeks that needed extensive plumbing repairs and cosmetics that had winning bids of $131k and $150k. Absolutely absurd.
We just bought two 3/1 duplexes within the last month. FMV in the area these are in are $115-120K. A HUD one needing lots of work just sold for $116k, and had a late bid of $118k. We paid $92k for one (REO) and $85k (boarded up and abandoned) for the one beside it. Spent $4200 rehabbing the first one and it is now rented, second one will probably need $6-7k of work. People are nutty when it comes to HUD properties anymore. I dont understand it. Maybe we should hold an auction for these two.....
Thanks for the replies. I guess its time to start listening to drunk lawyers.
Apple Valley, is not that where the famous M.Penn Phillips launched his chariot and split the desert into small parcels of 5 to 20 acres each? Then came back with paper, then discounted the paper to cash. I watched in great amazement. Good man, single runner.
The Delaware Corp. HUD, The Golden Sellers out of Texas. The Bank of Beal in Plano Texas. over 800,000 dollars of non performing paper assigned from FEEMA to the bank.
I think we are viewing something that makes the Gracas Brothers in Ancient Rome look like a bunch of pikers. Corner the Grain market, kid stuff.
I am watching the last days of a foreclosure here in North Hollywood. It was a FEEMA non performing note for $1,250,000 bought by the Bank of Beal for about 18% of face and that a promissary note non secured. The prop is worth about $900,000. Sale about 30 to go. I shall be there. And afterwards, I shall watch the shifting of titles and interest, dying to see who comes into final ownership. Like a good Mystery. Might make a good book. Sort of a SOP for them in the know. Should have gone to Yale, I could make straight C's. Learn the Whiffenpoof song.Join Skull and Bones, Major in Martinis. Clip my speech for Boston and then waggle my lips in Texas. Interesting. Oh to be born in Interesting times. It done happened.
Lucius
8-) 8-)
adding to the question what about the large multi unit hud deals, are they going for the same rediculas prices? :-?