When a HUD home comes out on market, the asking price is usually the FHA appraised value of the property. Lately, we are starting to see an exception to this norm in the Northern KY area, so buyers will need to be on alert!
When viewing the property on the main page of the official HUD website at www.hudhomestore.com, you will need to note what is listed in the "AS IS" section on the main page. If the price here is noted as "$0", then chances are that the listed price is HIGHER than the FHA appraised value! Let me repeat that, because this is the real news....if the price listed in the "AS IS" section of the main page on HUD's website is noted as "$0", then chances are that the listed price is HIGHER than the FHA appraised value!
In order to find out the current FHA appraised value, you will need to look up the "property condition summary" report on HUD's website. (It would be good to start doing this for all HUD homes just to make sure of the actual appraised value.) Look towards the bottom of this report and you will find the amount noted with an "AS IS" value. This is the number you need to know before you bid on the property.
So why is this important to you, the buyer? Well, as I noted in my previous blog about overbidding on HUD homes, some buyers in our market will try to edge out the competition by overbidding the amount listed in order to secure the winning bid. (We often see overbidding on these highly desirable properties.) That means that any overbid amount the buyer offered is now above and beyond the appraised value of that property. The key here is that the lender cannot lend more than the property is valued at, so guess what? The buyer is left to bring the total amount of the overbid in cash to closing so as to bring the total back down to the appraised value! Tough hit if your overbid was $4,000, but even more of a hit if the listed price is higher than the appraised value!
The key here is to know what the actual FHA appraised value of the property is BEFORE you decide to bid, especially if you will be overbidding as an FHA buyer. If the property is listed at $120,000 and you overbid by $4,000, you may think that you will need to bring the $4,000 in cash to closing to settle back to the appraised value. But if this is one of the newer properties where the listed price is NOT the appraised value, than you may be bringing a lot more to closing than the $4,000! Some buyers simply do not have enough cash to compensate for their overbid, even if they are taking advantage of the great HUD program which offers the property at $100 down. (Note that earnest money is additional.) If the buyer cannot come up with the cash, then they will fall out of the deal!
So now you know! Watch your overbids even more closely now in the Northern KY area. Know exactly what the FHA appraised value really is BEFORE you bid, because it may NO LONGER be the same as the advertised sale price!!!
Proceed with knowledge and be empowered to make the right decisions in all your real estate transactions.
NORTHERN KENTUCKY Real Estate Sales - Cathy Miles Realtor®
CINCINNATI, OHIO Real Estate Sales - Cathy Miles Realtor®
I specialize in helping buyers & sellers with their real estate needs in Northern KY and in
Cincinnati, OH . With passion, I invite you to board my boat for your next destination and
allow me the opportunity to help you navigate the ever changing currents of this incredible
just ask cathy...513.673.7726 firstname.lastname@example.org