Profile picture for jeffkc

I'm looking at buying a HUD home. How accurate is the HUDs appraisal for the price of the home?

  • February 22 2011 - Denver
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Answers (10)

I find they are oftentimes pretty accurate; however, I would ask my agent for a CMA and compare the results. In most of the HUD homes I have helped buyers acquire, the appraisal has not been an issue.
  • March 22 2011
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Profile picture for Jesse Madison
HUD appraisals are fairly accurate. If the home sits on the market for an extended period of time HUD will reduce the price below the appraised value. I have closed various HUD owned homes and they can often be some of the best deals on the market.



  • February 23 2011
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The question, and some of the responses, presume that there is a true market value that the appraisal can accurately match.  The assumption is ffalse.  If you send 3 good appraisers to a property, you're probably going to get 3 different numbers..and a difference of 5%... or even 10% with more difficult properties... wouldn't be a shock...even the appraisers involved.

That said, the general consensus below that the value HUD presents is generally in the right ballpark is correct.  The real question is how much you're likely to be able to negotiate off the price...or how much over asking price...you'll have to pay relative to the appraised value.  In general, in the first round of bidding, many HUD properties will sell for asking price or more.  If the property doesn't sell then, the likelyhood that HUD will accept a significantly lower price increases over time.

If you'll check out our "frequently asked questions" on the market on our website, you'll find some good data on the number of HUD sales...and bank sales more generally...in the area.  You'll also find some stats on the difference between the final asking price...and the actual sale price...both for "normal" sales and for HUD sales, bank sales and short sales. [Self-promotional link removed by Zillow Moderator]

  • February 23 2011
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Homes are not a commodity, meaning that there is no finite value per square foot or per pound.  However, HUD appraisals are typically fairly close to market value (at least that is their objective).
  • February 22 2011
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Jeff,

I just closed a HUD home this afternoon and the HUD appraisal was high by 3% or $2000 from the bank's appraiser.  This home was a rare find, almost move in and just needed to be cleaned. My buyer was an investor and was able to get the home after it was on the market for a while.  

Last year I put in quite a few bids for Buyers and the HUD appraised value was lower than the market.  Multiple bids and the FTHB tax credit was the reason prices rose.

Aloha,
Jaryd Takushi
[Phone number removed by Zillow Moderator] 
  • February 22 2011
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Being a HUD approved broker I can tell you that the appraisal if very close to value, when the home is first listed but they can take offers at less than asking price. HUD does not do any repairs on the propreties so what you see if what you get.  You will need to find a HUD Broker to help you with your offer.
  • February 22 2011
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Profile picture for Connie Klemme

Agree with others, they are pretty accurate. 

Just a little side note-a few people find such a good deal on a HUD home that they pay cash and fix it up so that it's in lendable condition however....you will have issues getting an FHA loan in that first year after a cash sale.  You didn't say anything about paying cash but there's a few other odd issues, if you plan on flipping it or somethign other than just living in it, talk with your lender about your long term plans (even if paying cash now and refi later....talk now- find out details).

  • February 22 2011
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Agreed, the HUD price and value are fairly accurate. [Link removed by Zillow Moderator]

  • February 22 2011
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Profile picture for cmerman
Pretty accurate but the list price is the appraised value as determined by HUD. The actual re-sale market value is generally higher then what HUD is asking but there will usually be a lot of fixing up and repairs to do. Many times in a slow market, you can get just as good of a deal on the regular market and not have to fix up anything! HUD will not fix anything after a offer is accepted.  The regular market homes will allow you to negotiate with owners with regard to price, inspection items and closing costs. Make sure you do your homework with regard to values in the area. Hire a good Realtor that knows the area well before you bid and you won't get burned....:)
  • February 22 2011
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Profile picture for Jerry Dolan

It is as accurate as any other appraisal would be. Hud typically sells the home for the appraised price. They can't inflate the value because they are in competion with all the other homes on the market.

  • February 22 2011
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