How much should I bid for a HUD house?

The question of how much to bid for a HUD-owned house is a good one. On the one hand, you don’t want to bid too much and waste money. On the other hand, you don’t want to bid so low that you get repeatedly rejected and waste time. Now, there isn’t a single magical formula that tells you what to bid for a HUD house. However, we have data on this website that should help inform your bid amount. HUD publishes the bid amounts (“net to HUD”) on their website. That’s the amount of money they get after all their commissions, concessions, and other fees that they have to pay. So, if you keep records of what HUD had on the market, you can do a market-by-market analysis of what to pay for a HUD house.

And, as you might expect with something as local as real estate, what you should bid depends highly on the market.

To do your own analysis of the market you are interested in, you can go to:

http://hudhomevalue.com/bidstatistics.php

Here are some samples of information you can get. For example, if you are interested in a house in Detroit, MI, which is one of the most inexpensive places to purchase a house at the moment, you will find information like this:

Days on the market: 0 days 10 days 30 days 60 days 90 days 120 days 19.50 days
(average days on market)
Expected bid amount
(as a percent of asking price)
86% 80% 69% 51% 34% 17% 75%

As you can see, as time goes by, the amount they accept as a percent of their asking price goes down. The average number of days on the market in Detroit is 19.50 days, and houses that sell after that amount of time generall go for 75% of the asking price. Here HUD is really willing to make deals.

This can be contrasted with King County, WA (home of Seattle). Here’s the same information:

Days on the market: 0 days 10 days 30 days 60 days 90 days 120 days 7.40 days
(average days on market)
Expected bid amount
(as a percent of asking price)
99% 99% 98% 97% 96% 95% 99%

In King County, HUD almost always gets 100% of their asking price and the house is gone on average after a single week. So, don’t expect HUD to accept a low-ball offer in King County!

This can again be contrasted to Wake County, NC (home of Raleigh). Here’s the data for that area:

Days on the market: 0 days 10 days 30 days 60 days 90 days 120 days 52.73 days
(average days on market)
Expected bid amount
(as a percent of asking price)
86% 85% 84% 81% 78% 76% 82%

Here, they will generally accept a notable discount from the asking price, but the amount of the discount isn’t affected much by time. However, the average HUD house stays on the market for getting close to 2 months. That should at least give you some time to evaluate if you actually like the house. However, don’t expect HUD to give a huge discount unless you reveal a defect they didn’t know about.

So, do your own analysis and find your own trends. (For example, 3000+ square foot houses are on the market for longer than 0-1000 square foot houses, but they don’t discount them as much as time goes by. This isn’t a surprising trend, but it is backed up by the data.) So, play around:

http://hudhomevalue.com/bidstatistics.php