So you want to buy a HUD home?
In today’s market, there are many types of foreclosure sales, but recently, the most advertised on T.V., radio, and newspaper classifieds are HUD homes.
What exactly is a HUD home?
A HUD home is a mortgage insured home through the U.S. Department of Housing and Urban Development in which a mortgagor has defaulted with its lender. When this happens, HUD then pays off the lender and in return becomes the new owner of the home.
Therefore, the term of a HUD owned home is in place.
There can be great benefits to owning a HUD home, but at the same time, you must be an informed buyer. These homes are often sold at or below market value. However, Buyer Beware: these homes are sold AS-IS. As-Is means, NO repairs will be made to the home. What you see is what you get. Therefore, I highly recommend you know what you are buying. Get an inspection from a trusted and qualified company. You will also be responsible for your inspection costs which will generally run approximately $325. No warranties will be offered on the home.
Next, be prepared for a whole new process of home buying. Everything you are used to is now out the door and those traditions no longer apply here. I highly recommend you work with an agent that is experienced with foreclosures and is a registered HUD agent. This will make your transaction a lot smoother and their knowledge of the process will be highly valuable when it comes to understanding the bidding process.
This brings us to your offer. HUD homes are sold as a bidding process. This means that your offer, along with several other offers are submitted on-line and the highest most reasonable bid is generally accepted. Most real estate agents often will use the term “make the cleanest offer possible”…which means to submit an offer with a strong price, and don’t ask for anything else. Sometimes the bank will pay buyer financing or closing costs, but remember this will make your offer weaker compared to other bidders. Your form of financing will also play a key role. You are considered a stronger buyer to the bank if you are a cash or conventional buyer. As you become an experienced investor, you will learn which homes are hot buys, when you need to have solid offers, verses times you can offer a lower price. It all comes with time.
If your offer is accepted, your earnest money will be deposited and a closing date will be targeted. In general, closings are 30-60 days out, but it is not uncommon with government homes to have later closings since they have to clear title. Often problems come up on title work that they have to clean up which can delay your closing.
If you are interested in purchasing a HUD home or have questions feel free to contact me as I am a registered HUD agent.
What exactly is a HUD home?
A HUD home is a mortgage insured home through the U.S. Department of Housing and Urban Development in which a mortgagor has defaulted with its lender. When this happens, HUD then pays off the lender and in return becomes the new owner of the home.
Therefore, the term of a HUD owned home is in place.
There can be great benefits to owning a HUD home, but at the same time, you must be an informed buyer. These homes are often sold at or below market value. However, Buyer Beware: these homes are sold AS-IS. As-Is means, NO repairs will be made to the home. What you see is what you get. Therefore, I highly recommend you know what you are buying. Get an inspection from a trusted and qualified company. You will also be responsible for your inspection costs which will generally run approximately $325. No warranties will be offered on the home.
Next, be prepared for a whole new process of home buying. Everything you are used to is now out the door and those traditions no longer apply here. I highly recommend you work with an agent that is experienced with foreclosures and is a registered HUD agent. This will make your transaction a lot smoother and their knowledge of the process will be highly valuable when it comes to understanding the bidding process.
This brings us to your offer. HUD homes are sold as a bidding process. This means that your offer, along with several other offers are submitted on-line and the highest most reasonable bid is generally accepted. Most real estate agents often will use the term “make the cleanest offer possible”…which means to submit an offer with a strong price, and don’t ask for anything else. Sometimes the bank will pay buyer financing or closing costs, but remember this will make your offer weaker compared to other bidders. Your form of financing will also play a key role. You are considered a stronger buyer to the bank if you are a cash or conventional buyer. As you become an experienced investor, you will learn which homes are hot buys, when you need to have solid offers, verses times you can offer a lower price. It all comes with time.
If your offer is accepted, your earnest money will be deposited and a closing date will be targeted. In general, closings are 30-60 days out, but it is not uncommon with government homes to have later closings since they have to clear title. Often problems come up on title work that they have to clean up which can delay your closing.
If you are interested in purchasing a HUD home or have questions feel free to contact me as I am a registered HUD agent.
posted by Christina at 10:14 PM
1 Comments:
Excellent blog and great post
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