Top 3 Cheap Cities for Seniors

Top 10 Most Affordable Cities For Seniors

1. Daytona Beach, Florida.
2. Pocatello, Idaho
3. Bangor, Maine
4. Greenville, South Carolina
5. Grand Rapids, Michigan
6. South Bend, Indiana
7. Mill Creek, Pennsylvania
8. Louisville, Kentucky
9. Sherman, Texas10. Pueblo, Colorado

Affordable Cities and Cheap GovernmentHomes makes good $ense for Seniors. 

Feeling Left Out? Can't Buy a Foreclosed House?

Low Down Payment With HUD Auctions

In most cases, first time buyers get screwed by the big boys with cash.

The average home buyer is not able to compete with all cash offers or 30% to 50% down payments.  Housing Wire reported today, first time home buyers are loosing houses to cash buyers and bidders with large down payments.

No Worries

When you buy a HUD House.  All bids are treated equally.  You can win by $1 or $1,000.  Hud homes, that are FHA Insured or in HUD Language  IN generally do not go over asking price.   Hud homes are apprasied by an FHA apprasier.  This price determines, the amount FHA will insure on a home loan.  This keeps the bidding reasonable and fair, and of course you can bid under the asking price. 

In many cases, even if there are multiable bids, you can still win the bid with a smart bidding strategy.  The winning bid is determined by highest net value.  FHA will only loan on the orginal list price, any amount over must be paid with cash out of pocket. For example if a HUD house is first listed for $75,000 and the buyer is going to use a FHA loan, we know that the offer price will not be higher than $75,000.  In some cases, buyers may prefer not to use an FHA loan and then they may offer a higher price.  In my experience, bidders who bid way over asking price on a HUD house, will often times drop out, (buyers remorse) because they realized they paid too much, however if the buyers use a non-FHA loan, they are not restricted by the FHA apprasial of the orginal purchae price and may bid higher.

Winning Bid Example

Buyer A bids $75,001,  Hud will pay up to 3% closing costs and will pay up to 3% in commissions.

Buyer needs the full 3% closing cost credit or $2,250 and the Hud Approved broker requires full commission of $2,250. (3% x $75,001) please remember, the commission paid to the Approved Broker representing the buyer is negotiable.

$75,001 Offer Price from Bidder A

$2,250   Closing Cost Credit from HUD

$2,250   Commission paid to Hud Approved Broker from HUD

$2,250   Commission paid to Broad Listing Agent  (A fixed amount at 3% and not negotiable)

$68,251  Net Value to HUD.   This is the value to determine winning bid.

Buyer B bids $74,500, Buyer B does not need full closing cost credit, and only asks for $2,000 and Buyer B’s broker agrees to take off $235 off the commission, for a flat $2,000 (3% x 74,500)

$74,500  Offer Price

$2,000   Closing Cost credit to buy from HUD

$2,000   Commission paid to Hud Appproved Broker from HUD

$ 2,235  Commission paid to Broad Listing Broker from HUD

$68,265  Net Value to HUD

Bidder B Wins by $14 even though Bidder A bid $501 higher.   By taking less closing costs and through broker cooperation, a win-win relationship created a winning bid.

HUD Homes make $ense. The bidding is fair and with good strategy and an experienced HUD Approved Broker will help you win the bid without over bidding.

Top 3 Tips for a Winning Bid

1. It will take 3 to 4 offers to Win
2. Being in second place as back up gives you a great chance to win without over paying.
3. Track the Bid Results to give you an idea if bids are going over price or below price, just remember that the price posted is net to HUD not offer price.  

WoW! $100 Down Payments for HUD HOMES

If you live in  Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, Wyoming and Utah,


You can purchase a HUD home for $100 down payment.   Go to $100 HUD Programs
for more info.

Arkansas Suspends HUD Home Sales

We just learned that HUD homes in Arkansas will not be available for sale. This halt of sales is do to properties not being able to convey with clear title. If anyone has more info on this, please comment.  I suspect it is due to the MERS  Mortgage Electronic Registry and the fraudulent use of robo signers.  This is just my opinion.

Your HUD Broker Earns 3% Commission

Commissions,  for many first time buyer's has been confusing.  HUD homes, are no exception.  When an offer is submitted the maximum commission paid to the broker representing the buyer is 3%.  The listing broker also makes 3%.  The commission to the buyer's agent, is not fixed in stone.  They may be willing to discount it a bit in order to assist in facilitating a winning bid.  Just ask, it is up to the buyer's agent, if they are willing to do this.  Some will some won't.  Please note, it is negotiable.  the listing side is a bit more tricky.  These commissions in most states are fixed, and have not observed flexibility.  The listing agent is also allowed to represent the buyer, in those cases the real estate broker can earn a 6% commission.  This does create an unfair competitive advantage, to buyers using a non-listing broker.  As the listing agent, has incentive to discount the buyer side of the commission.  This is a new change in the HUD policy.  A change many brokers disagreed with because of the bias.  If you submit an offer on a HUD home you must use a HUD Approved Broker.  This search feature will be available soon form this blog.

A tip for a winning bid on HUD HOME

One of the many benefits to purchasing a HUD home, is that it is fair, no secret handshakes or pocket listings.  Home buyers have an equal shot, based purely on price.  Remember, investors can only bid after a property has been listed for 30 days.  Owner occupants bid after 10 days.  The winning bid, is calculated on net proceeds to HUD.  This net value is after closing costs and broker commission.  If you use an FHA loan, you can take up to 3% in closing costs. So, on a $200,000 offer, you can have a closing cost credit up to $6,000.
Instead of taking the full $6,000, you may want to adjust down by $50 to $5,550,  this  adjusts up the net to HUD up by $50.  Thus giving yourself an edge when competing with the sealed bid.  You can win a HUD sealed bid auction by $1.