I am in the last stages of purchasing my $100.00 hud home (closing 8/26). You don't need to have the 3.5% down or in savings to be approved. It literally is "$100.00" down! Which was great for me, as I did not have a dime in savings. I did however, have to have $1,000 to open escrow (borrowed from my ex), but I will get this money back at closing. Another good thing about the $100.00 down homes are hud paid all my closing costs, termite inspection, and appraisal. They also pay for an inspection, but it's not a buyer's inspection, which is much more thorough.
My realtor and the hud website says your minimum bid has to be the appraised price (or higher), which is what I bid and won. BUT, I did notice that other people bid lower than the appraised price on homes and won. i think (not positive though) that they bid after the bidding was opened up to all. The first 10 days are for owner-occupied bids only, after that, investors can bid. The problem is, if you wait until it opens up to investors, investors usually have more cash to put down.
Good luck.
Starting Score: 638
Thank you. I believe you have to have an agent do the bidding for you. (which you may already know). I had to find a real estate agent that could do the $100.00 down hud homes, because apparently not all can. All of the homes on the PEMCO (well, that's the company that hud uses in California) website qualify for the $100.00 down. I did see some winning bids that were lower than the appraisal, so I'm not exactly sure how that works, but I'm sure your real estate agent could tell you. Since I actually only bid on one, I'm exactly sure of all the qualifiers, it all happened so fast. And yes, you're probably right about the bidding, if it's been open for 3 weeks, I'm guessing no one has bid asking yet.