Here is a situation that I frequently see happen in the Northern KY area when a buyer is anxious to win a bid on a great HUD home.
A new HUD home comes out on market with an asking price that seems to be quite a good deal. The buyer decides that they 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.) The buyer's agent places their buyer's overbid and.....voila!.....they actually win the bid!
Now all that seems great, until one small detail arises out of the hoopla. The agent may not have been aware that overbids on HUD homes bring with them a harsh reality that may now catapult the buyer right back OUT of the offer.
When a HUD home comes out on market, the asking price is the actual FHA appraised value of the property. This appraisal is accepted by the buyer's lender (as long as the property closes within the appraisal's FHA duration of 4 months). 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 $5,000, eh?
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, because you will pay for them in cash!
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
Helping to educate buyers & sellers to make sound real estate decisions. ___________________________________________________________________________________________________________________-
KY & OH Realtor® / EXIT Realty / firstname.lastname@example.org