HUD Question
I need advice please.
I amnew to REI and this is my first deal. It was a HUD foreclosure and was listed and $130,000. We made offer of $118,000 thatgot accepted. WE just got done with appraisal and it came back at $120,000 because sq footage is 500 sq ft less than what HUD listed it ****Must Reach Freshman Investor status before posting URL's***hat throws our numbers off. After repairs and closing costs theres no way we can make money . So we want to cancel contract. Is there any way to get our $1000.00 earnest money back from HUD? Realtor says no way because you are investors and property was listed at that sq footage based off of tax records. Well, how could you know something like sq footage without appraisal? anyway, tax sq footage does say property is 2500 sq ft where in reality it is 2000.
Any advice?
Please help.
You should talk to an attorney about this. If the listing was wrong, I don't know much about buying HUD properties, but I have looked at them before, and when I have looked I had a hard time getting "all" the information on them that I wanted. Maybe one day I'll look back into it.
But yes I would talk to someone (lawyer) who will be able to tell you "yes or no" if you can get your earnest money back. Maybe try posting in the legal forum.
Good Luck.
JB
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thanks ...i'll post it there.
Basically what you have here is an unexceptable property inspection. In PA that would give you the right to obtain your money from the realtor. You must check you state laws. There is a number to HUD and a contact (who signed the accepted bid) call them and ask if you would get your money back. You can do a hypothetiical on the phone and see if you fall in the guidelines.
Lori
I have seen both money given back and money kept
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HUD will not refund earnest money if you do not honor the contract. You should have done your due diligence before making your offer. You will probably have to chalk this up as a loss. HUD makes and implies no warranties on information supplied.
This is a touchy situation. Like Tinman has stated I have seen both people get their money back and some people have to forefeit their monies.
Of course the realtor is going to try to tell you anything they can to keep their commission. Your best bet is to go to your regional HUD office in a suit and tie and talk to a manager. Explain to them the situation and see if they could give you back your deposit and relist the property. If you plead you case bad enough, they might give in. I have seen this happen. Give it a try and let us know what the outcome is.
Best Riches,
Jeffrey Adam
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Quote:
On 2004-03-02 02:15, JeffreyAdam wrote:
Of course the realtor is going to try to tell you anything they can to keep their commission.
Jeez, Jeff. Do you think you could stop flaming us over here? I'm getting a little tired of all the anti-realtor trash-talk..
Anyway, on the HUD site, as on all MLSs, its all IDRBNG (info deemed reliable but not guaranteed). If you go and make offers and sign PAs based on someone else's figures, it's only a matter of time before you get burned.
Well, this is your time.
Shame on you for not getting a proper home inspection.
Sorry, I know the truth hurts!
Best Riches,
Jeffrey Adam
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Tough lesson if you can't get $1K down money back but you'll remember the next time to do the due diligence and that may save you a lot more than $1K. Square footage of a structure is one of those property characteristics that is particularly susceptible to variations. Everybody has a different way of measuring it. In addition, there is always the possibility of typos when the info is being inputted into the tax assessor database.
af7850,
I agree with you also about the RE agent trash talk. Some people just can't seem to resist doing that. If we lie, we stand to lose a lot more than any investor.
To my knowledge, HUD will not refund any earnest money for any reason. I've been looking at HUDs in CO through my Realtor/sister. In CO, HUD disclaims EVERYTHING about their properties, and they make no apologies. They'll allow you to do a home instection, but if the inspection goes south, so does your earnest money. If you back out for ANY reason, you're hosed. Ironically, you can't even turn on utilities to DO the inspection until you have it under contract. So not only do you lose your earnest money if you back out, but you lose the money you had to pay to de-winterize the house, turn on electric, water, and rent a propane tank.
I've decided that HUDs are way more trouble than they're worth--at least in CO--unles you happen to find a 'miracle' property.
Maybe it's different in your state, though.
Thanks all you guys !!! Its wonderful to see people care.
As for the outcome, I did call several HUD contacts and got same answer...sorry no money back. So we are withdrawing our offer today and forget about getting our money back. It sucks cause it was my first deal ! I did learn my lesson though....I am never touching another HUD property !
If you've already cancelled the contract it won't matter, but have you yet did you due diiigence on the property? The reason I asked is because there are reasons that it was appraised for $120K. First, it is being appraised in it's current condition, not rehabbed. What will the value be after you fix it up?
Second, and most important (especially if this isn't your appraiser), it came it at $120K because your buying it for about that. Most appraisers will not value a home much over what your buying it for.
Last HUD home I bought, HUD appraisal was for $65K. Three months later (with my buyer anxiously waiting), appraisal was for $92K. Amazing markup for only about $5K in rehab? Nope, just a lousy first appraiser (along with alot of trash).
Roger
Good Day to you:
Before you throw your money at the Government and say goodbye, a couple questions come to mind. What is the house worth as a rental? How much to make ready? Sure this method, if it could cash flow, is not the $20K that you thought you could get, but you could have a tenant pay your mortgage while you gain on the tax ded. and appreciation. I have also heard from others, that once you back out of a deal with HUD, you're done, and since this RE game is a marathon and not a sprint, you may want to try a HUD home again some day. Just my thoughts.
Good luck and make $$$
Tom
Again, thank you all for caring.
rajwarrior and tclifford10 :
Yes I did do the due deligence AFTER we found the problem. appraiser is a great guy that I've used for years ( I am loan officer) yeah yeah...you would expect better from someone in the loan business but what I can say....I was never this side of fence ! Anyway, turns out HUD did appraise it at the 2000 sq ft but didnot list it as that. They say appraisal was available if we asked for it but since we didn't too bad!
The property rents for about 1200-1400 a month. My total liabilty in PI and taxes and ins is about www.1200.maintanence and management is on top. It may be still a good deal for some people but we are already stretching it and loan hasn't even closed.
Anyway, I ve learnt good lessons and hope to do better next time.
Again, thanx to everyone for caring.
Why don't you ask your appraiser what kinds of things you could do to spruce up the place for a resale to recoup your investment.
Sorry but when it comes to money I'm a sore looser and i don't loose often. Figure a way to make it pay it can be done talk to realter in the area ask them the same question you asked your appraiser. Think about it before you throw in the towel.
ED
Ed : Heres the deal....the property is in pretty good condition...just needs paint www.carpet.there is no way to make money on this property unless I con some unsuspecting first time home buyer into siging a lease/purchase without disclosing the actual sq footage. OR i could list the house for sq footage shown in tax records, get the buyer to do loan with my office and then ask for only a drive by appraisal and con my way out. Whle it is hard to loose money of mine, the other proposition is harder still.
like i said, no more hud homes.
Understood.
Sorry just can't stand to see anyone lose out without looking at everything. Would not ever suggest you misslead anyone to make a deal, been had that way myself .
Better luck next time
Ed
You've already made your decision, but I wanted to point out a few things for others that may be looking at this post. Personally, I think you bailed too quickly without the proper research, but only you have the actual figures together and only you know what you are willing to work with.
If HUD listed it at $130k initially, then that is what thier appraisal came in it. So going by their appraisal, you got a $10K increase in value without lifting a finger to fixup. Appraisals are just opinions of FMV, and can be adjusted to whatever it needs to be, within reason. As a loan officer, you should be well aware of this.
You're best bet on determining real FMV value is to find out what comparable homes have recently sold for (fixed up). I'd being guessing completely, but I'd bet it would be in the $135-45K range.
Don't know you financing arrangement, but $1200/month seems very steep even for 100% financing. There are other options besides renting which would command $1400 or better per month and no maintenance/insurance costs.
Roger