Buying a HUD Home
Posted by Eric Miller on Tuesday, February 1st, 2011 at 4:09pm.If you're like many home buyers in today's market, you're looking for a great deal. HUD (Department of Housing and Urban Development) homes provide the chance to get that great deal, but buying a HUD foreclosure is a little different than a normal real estate purchase. In order to understand the HUD home buying process you must first understand what a HUD home is.
What is a HUD Home? From the HUD website, it states: "A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim." There aren't a whole lot of HUD homes available, but with the increase of FHA mortgages as of late, we can expect to see more in the future.
How Much Are HUD Homes? HUD prices homes at current market value and sometimes a little less in order to entice buyers for a quick sale. HUD homes that need repairs will have an adjusted price to compensate for the repairs as all homes are sold as is with no warranties. If the home needs repairs it's up to the buyer to decide of they still want to buy the home and make the repairs themselves.
Can Anyone Buy A HUD Home? It depends on the timing. Anyone can buy a HUD home, but purchasers who are buying the home as their primary residence are given first priority. If the home isn't bought after the initial bid process than an investor can submit a bid.
Submitting An Offer: HUD foreclosures are sold differently than a normal sale. HUD uses a bidding process where they open up the home to bids by primary residence bidders. At the end of the initial period, HUD will accept the highest offer if it meets their requirements. If all offers are unsatisfactory after the initial bidding period, bidding is opened to everyone including investors. If your offer is accepted you will be notified within 48 hours and will be given a settlement deadline within 30-60 days of your contract acceptance.
Do I Have To Use A Realtor To Bid? Yes. In order to bid on a HUD home, you must use an approved HUD Realtor. In order for a Realtor to be HUD approved they must first submit paperwork to qualify and have a background check.
What Type Of Financing Can I Use On A HUD Home? You can use an FHA loan, conventional loan, or cash to purchase a HUD foreclosure. You must have proof of funds if cash or a pre-approval letter from a lender when submitting an offer. You will have time after offer acceptance to obtain financing through a financing contingency.
Can I Inspect The Property? Yes, after your offer is accepted you will be given enough time to complete your due diligence period. However, keep in mind that HUD will not help with repairs. If you find a defect in the property, you can ask HUD to reduce the price to pay for repairs, cancel the contract, or continue on with the purchase and fix the property yourself. Buying a HUD home can be a great way to get a deal on a home, but keep in mind, just like any other government entity, there is a process. Paperwork must be perfect, homes are sold as-is, and there are usually multiple bids so you have to be patient. Good luck! Article written by Lisa Udy a real estate agent in Logan Utah who lists short sales in Logan Utah and can help buyers find the best deals on Logan Utah HUD homes. Please visit Lisa's Logan UT real estate website for more information.
Eric Miller is an award winning Florida Realtor, salesperson and broker. His website, FortLauderdaleGroup.com provides an up-to-date guide of Fort Lauderdale Condos for sale, and the most complete buyer, seller and investor information for the Fort Lauderdale Real Estate Market.
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Posted on Wednesday, February 2nd, 2011 at 8:17pm.