You never know what the Government will do. This was the case on a recent HUD Foreclosure that we purchased. Interestingly enough it was the exact same floor plan of one we had purchased and resold a few months earlier. It also was sin Alpharetta and is posted on our Blog under “Flip This House”.
We had been watching this home for sometime. It was originally offered at $110, 000, as shown below. Having just purchase the exact same house several months earlier we knew what we could resell it for and thought we had a good idea what we could purchase it for. One thing to remember about HUD is that once you make an offer on the property, they respond by either accepting the offer, or by declining it. The neat thing is that when declined they always tell you what their minimum net is. It is here that we were amazed at the inefficiency of the government.
Our original offers were far less that the list price of $110,000 and their required net of $99,000. We had started in the high 50’s and had slowly worked our way up to $72,504. During the auction process we made offers every day. In the beginning we raised our bid several hundred dollars a day. In the end we were raising it $1.00 a day. Then one day we received a Price Reduction notice, which also indicated the minimum net to HUD was $61,500. Our last offer, which was rejected would have netted them $68,153.76. So, what to do? We quickly accessed the property again and decided to offer $67,500, $5,000 less than we had already offered for the property. The next morning we received an email notice that our offer has been accepted. We were pleased but amazed at how inefficient our government is. On just this one house they lost $5,000. Think about how many times this happens across the country every day.
Once accepted we quickly addressed the issues associated with preparing for closing’ nailing down hard costs for various aspects of the renovation. Having just renovated one just like it only a couple months earlier actually made it pretty easy. Our plans were to install a new deck, replace the roof and gutters, and replace the deficient Masonite siding with concrete siding. Additionally we replaced all windows, gutters and sodded the front yard just to finish it off. BTW the bird bath in the front yard was my idea.
On the inside we started over in the kitchen and bath rooms. New cabinets, appliances, fixtures, and the installation of a wall between the kitchen and living area really made a difference. Additionally we went ahead and retrimmed the entire house and added some iron balusters on the stairway, along with an oak handrail. THESE IMPROVEMENTS MADE A BIG DIFFERENCE.
The total project took about four weeks, and we were ready to put it on the market. We stared out at $154,800, and quickly decided to lower the price to $148,900. We quickly received an offer from a very nice agent named Laurie, who was representing a client that loved the yard and the condition of the home. This house was on the market a total of 11 days before we went under contract. The balance of the process was uneventful except for having to have a second appraisal. This is due to the fact that we sold it for more than double what we paid for it. Both appraisals came in fine. Our final sales price was $140,000. And all were happy.
Next month we will share a recent Fannie Mae foreclosure that we purchased on Lake Lanier, and renovated for a client that was looking for a second home there. You don’t want to miss this one.
Van Purser is a licensed real estate broker in Georgia. Since1981 he has successfully purchased and renovated over 400 homes. His expertise is in the area of foreclosures, rehabs and fixer uppers. Additionally, he has represented hundreds of clients over the years as a broker with Metro Brokers, RE/Max and now with his own firm. He and his wife, Jeanne, who is also a broker, have been married since 1977. Van can be reached at 770-623-3313 or by email VanPurser@VanPurser.com