buying a HUD home

A REALTOR® can protect a buyer Free Forms The Benefits of listing with a REALTOR® Visit my Blog

About Daniele

What Clients & Customers are Saying

For Buyers

For Sellers

My Listings

Search MLS For Homes

Help Me Relocate

Recommended Professionals

Questions and Answers on Offer and Acceptance

How to Negotiate with Sellers

How Do I Buy a HUD Home?

Preparing your Home for the Market

Get Financing

NEW Flat Fee Listing service for FSBO's

I Want To Buy A HUD Home. What Really Is It?

Ok, you found the perfect house, and you've been told it's a HUD home. You and your realtor have taken a walk through and your are ok with doing some of the repairs it needs. Overall the house seems to be in good shape, you believe it's been lived in a little hard and needs some TLC. What next?

Well....First lets look at what a HUD home really is. A "HUD" home is one who's original financing was insured by the FHA (Federal Housing Authority, part of the Department of Housing and Urban Development) The owner could not make payments and the lender was forced to foreclose. FHA pay's the bank the the balance of the loan and the property reverts to HUD. Now it sells it to replenish the funds so it can insure new loans for more homes. Cool huh?

The number one thing you absolutely NEED to have is a Realtor. Why? because HUD will only accept electronic bids from HUD-registered brokers who have a HUD key. (yes, I have one) You and your Realtor will put together a package for HUD and submit it on line. These bids are stored until the appropriate time, then are released and automatically calculated to determine which one offers the highest net to HUD. For the first 10 days a HUD house is listed, all bids are reserved for Owner Occupants...meaning people who plan to remain in the home for a minimum of 1 year as their primary residence. After the 10 day window, bids are reviewed on a daily basis and are open to everyone. Investors and owner occupants alike.

Now that we have decided you NEED a realtor lets address the all time question... "What's in it for ME?"

Making an Offer What makes a HUD Home so attractive? Well for starters they are great homes for the low to middle income and/or first time homeowner. All HUD homes are offered without regard to race, color, religion, sex, national origin, handicap, or familial status. Anyone who is pre-qualified for a mortgage loan may offer to purchase a HUD home.

Earnest money? How much? Usually $500 to $1,000 needs to be included with the bid. If for some reason later, your situation changes, you must inform your agent as soon as possible or you could loose part or all of it. - That's no good.

Can I Ask for Closing Costs? Absolutely. HUD will pay up to 5% of your realtors commission and up to 3% of your closing costs! Just remember, its all a numbers game with HUD. The lower your bid is from the asking price and the more closing costs you ask for, the less HUD will net from the sale. Meaning, the less likely your bid will be accepted, so make your highest and best bid the first time.

The Key to Financing a HUD Home. It's simple, get pre-approved by your local mortgage lender NOT a mortgage broker. There is is difference and HUD will only accept pre-approvals directly from a mortgage lender that shows a current date, the name of who's credit was reviewed and approved and the amount of the loan.

There is of course more to the process with deadlines, closing dates and how to complete the offer, so contact your local REALTOR® or send me a quick e-mail and I will assist you personally. Just remember that fraudulent bids are subject to severe penalties under the law which means the bidder, that's you, AND the Broker, that's me, would be in very deep trouble... and that would be very bad. So when you make a bid on a HUD home, make absolutely positive you are willing and able.

Free Forms Site Map
DSummerfield@Wilkinsonandassociates.com