Better To Buy From Bank Or HUD?
I'm currently investigating a foreclosed property held by a bank. The bank stated that they plan to eventually convey the property back to HUD, and that HUD would make the bank whole on all of the bank's costs. Upon further questioning, the bank person I was speaking to said that their asking price reflected those costs, and she was implying that I shouldn't bother to offer any less than what the bank's asking (because they would have no reason to accept such an offer).
At their asking price, I think I could re-sell for a 10-20% profit or hold it for rental with a decent positive cash flow. Since this is my first attempt at REI, I'd like to know if I'm understanding the bank correctly and whether I might be able to negotiate a better deal by letting the property go back to HUD? If I buy the property from HUD (or the bank), would it be subject to any HUD restrictions, or mine to rent to who I please? Thanks for any assistance you could provide.
What is 10 or 20 percent? If there is a nice profit then the deal makes sense. Do your homework and make sure of this.
If it is a HUD property then only owner occupants can purchase it in the first ten days it is on the market. This tends to drive up the price. Remember, the more people that know about a good deal, the higher you are going to pay for it. In my experiences, banks are more likely to take a lower price than a HUD home.
What is the property worth to you? Offer 10 or 15% less than that and then let them negotiate up to what you are willing to pay.
It doesn't matter how the bank came up with their asking price. There are more factors that determine what a bank is willing to take for the property. You can throw in a low ball offer and see if they will counter. Most likely the person on the phone does not make the final decision on the price.