HUD foreclosed homes are popular investment choices for home buyers or investors looking for a "good" deal. I hosted an investor agent panel discussion held at Keller Williams Northwest earlier this week. We were asked whether HUD homes are good deals for investors or even owner-occupant buyers.
Unanimously, we responded that HUD foreclosures are not good deals in the Austin market. Investors should especially avoid them except in very rare instances.
WHY HUD HOMES ARE BAD DEALS IN AUSTIN
- Too public of a process. Bidselect is where the Texas HUDs
are listed. The site is no secret and is just like buying a home on MLS.
Every investor in the world can find HUD homes now. To make matters worse, they're usually listed in MLS anyway.
- Too many bidders. We all know that Texas is one of the HOTTEST market in the U.S. Austin is possibly THE HOTTEST market in Texas. Competition is stiff and we've even started to compete on off-market deals.
- Overbidding. The final accepted price for HUD homes have been about 10-20k above the asking price on average due to the bidding frenzy. Many HUD buyers pay at or above market price because they get emotional and/or bet on appreciation.
- Investors can't get a fair shot. If you're going to occupy a HUD home, you have the best shot at winning your HUD bid since the first round is reserved for owner-occupants. It's very rare that a good home will make it past the initial bidding phase. Investors waste time by placing their bids, which are allowed, but not evaluated.
If you really want to buy a HUD home, go fort and try to prosper, but be cautioned. The more you know, the less likely you will get caught up in overpaying for a HUD.
Learn more about the HUD bidding process. Visit BidSelect.
Read about How bad deals are made.
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