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Overbidding on HUD homes
Most of the homes my husband and I have looked at are HUD homes. They all need some kind of work and are mostly listed at $50k and below. We've put offers in on 6 of the homes so far and have been outbid on every one. Some of the offers we put in lower than the list price, others we overbid (the most we've overbid was $3k for a home listed at $29k).
We're putting another offer in on a house listed at $29k (that is significantly larger) this weekend...the house has over $5k of known repairs (we would obviously still get an inspector to go through the place and give us a detailed list of all repairs needed to bring the place up to code). Other houses in similar condition in the area that have recently sold have been overbid by $500-$5k for FHA/Conventional loans and UNDERbid by $500-$5k for cash.
We really want to actually get this property - we're willing to go as high as $40k, but we do not want to overbid by so much that there's a $3k-$6k gap between our bid and the next highest bid....do you guys think it's a good idea to just go for it and put in the offer at $40k if we really want the house that bad? Or should we be a little more conservative and go for the $35k or $36k offer in hopes that it's the highest?
I should note that competition for houses has drastically increased since some of the most recent sales due to a $3k first time homebuyers grant that has recently become available in Michigan on a first come first serve basis.
Re: Overbidding on HUD homes
If this is happening, it seems that being aggressive is the way to go if you really want this property.
But what happens if you bid high and then discover come inspection time it needs lots of work...do you have the ability to pay for that if you've maxed out in your bidding process?
We've found a mortgage company that specializes in loans where you can go back after closing and take out additional money for repairs and they roll it into the mortgage.
We'd be going in with a $40k offer anticipating taking another $10-15k (depends on what the house appraises for) just for repairs. We can more than afford it (we're planning on a 15 year mortgage and the payments with insurance an PMI is still less than we pay in rent for our apartment now). I know in the scheme of things a few thousand dollars difference on a house shouldn't mean that much, I'm just so new to this and don't want to feel like a sucker.
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Thanks for the advice! We ended up putting an offer in for $36,500 - it's still overbidding by more than $5,000 so we feel our bid will be the highest. We know we might still lose to a cash offer though.
I'm hoping we hear back today!
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We bid on a Fannie Mae home and it became a bidding war. We put in an offer 8K above asking and won it. Do I feel like I paid too much. Not really. It appraised almost 30K above what we paid. And I really wanted it.
I'm glad you found a bank that could help you. My bank walked out 2 days before closing.