When you multiply 11 grand by 100,000 or 200,000 properties, you're talking a lot of money down the drain.
"It probably happens day in and day out," said Chant. "The government is leaving millions on the table. It's an incredible waste."
Chant, vice president of Chant Engineering Co. in New Britain, is no stranger to dealing with the federal government, since a substantial portion of the firm's business is with the Department of Defense.
He's also been acquiring investment properties from HUD and other sources for 15 years.
"It's something I do every once in a while," Chant said, starting "when I was young and single and had no money."
The first was in Norristown, a $40,000 HUD property he "did with borrowed money." He used a cash-out refinancing of 80 percent of the value of that to buy another for $30,000.
There have been several other purchases - HUD, VA, and others - and at one time, Chant got his father involved.
Though Chant sold most of the properties, he has held on to a five-unit building in Perkasie, "since I live there and can keep an eye on things."
When a HUD foreclosure around the corner from the multiunit he owns came on the market, it didn't seem much of stretch to make an offer.
His agent, Carol Frey of Keller Williams Real Estate in Montgomeryville, presented Chant's net offer of $60,000. Someone bid higher, $70,000 net, for the property.
HUD accepted a third offer of $48,750. When Frey asked why, she was told that "it doesn't happen very often that HUD agrees to take less for a property than their 'formula' allows - but when they do, this is the system."
Apparently, the "system," as explained to Frey and Chant, is this: Your bid is only good for one day. HUD randomly picks a day and takes the highest bid on that day. Supposedly, no one but HUD knows the day.
Chant said he was surprised not by the fact that he didn't get the property, but that HUD didn't take the highest offer.
"It's sort of stupid," he said.
When HUD looked into the matter, it found that "human error resulted in the acceptance of a bid that didn't meet the threshold set for the property," said spokeswoman Maria L. Bynum.
She explained that HUD reviews the bids for each property daily, and that the one that meets or exceeds the threshold is chosen.
The agency is taking steps to prevent a repeat, she said, and is relisting the property Chant had his eyes on so that everyone can rebid.
Inquirer real estate writer Alan J. Heavens is the author of "Remodeling on the Money" (Kaplan Publishing). His home-improvement columns appear Fridays in Home & Design. "On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.
