WE SELL HUD HOMES
WE SELL HUD HOMES
A HUD home is one presently owned by the U.S. Department of Housing and Urban Development. Lenders recover homes from delinquent borrowers and when the loan on the property is insured by the FHA the lenders submit a claim, collect the insured amount and transfer title to HUD.
The government has no wish to be in the home owning business, so HUD puts the home on the market and sell it as quickly as possible. During their process they inspect the home and obtain an appraisal for the property in its present condition. The appraised value is asking price. Obviously, the market place does not always agree with the appraisal and HUD homes that stay on the market for some time are reduced in price.
Not every broker (company) or agent can represent you in the purchase of a HUD home. The broker must be approved and the agent must be registered. If you have an agent who is not approved they are not likely to include HUD homes in your buyer tours. Some HUD homes do not have the normal lock box, so agents who are not approved can not provide access to all HUD homes. Can you afford to ignore well priced homes that may meet your needs?
HUD homes use to be considered those in such poor condition that major repairs and improvements were needed to make them habitable. Although some HUD homes still need repairs, many are in good condition and need only touch up paint and carpet cleaning. Each should be reviewed by the buyer to determine if level of clean up or repair is acceptable.
There are opportunities for prudent buyers to pick up good deals in the HUD home market. Their asking prices are usually at, or slightly below market. They will agree to contribute up to three percent of the asking price to cover buyer’s closing costs (on a $ 300,000 purchase they will contribute up to $ 9,000!-a tidy sum).
HUD also sets the sales up to favor buyers who will actually live in the property. You MUST agree to do so and there are severe penalties for those who do not. For the first thirty days of most HUD home listings, HUD will only accept offers from owners who will occupy the property. So buyers who can not compete with investors have an advantage. After the 30 days period the properties are available to investor buyers.
EVERY HUD home qualifies for FHA financing. As a result a buyer needs only the requisite 3.5% down payment to buy the home. This is a very important point, because is it difficult to obtain financing on many homes and most condominiums in this market. A 3.5% down payment is less than most other organizations will require. The government wants these homes occupied by owners who pay their mortgage payments and their taxes. That is what will get our economy back on track.
HUD homes are all sold “AS IS.” HUD will NOT pay for any repairs. There are two exceptions when FHA financing is used. HUD will pay for repairs of items listed in section one of a pest inspection report and they will pay for up to $ 4000 for remediation of lead based paint problems. The buyer must pay for all other repairs.
In order to deal with condition issues a buyer may opt for an FHA 203K renovation loan which covers the costs of approved repairs and includes those costs in the mortgage.
If the buyer elects FHA financing their appraisal has already been completed and they save the cost of an appraisal, often $ 400 or more.
In essence, HUD homes are a segment of the market that buyers looking for a good buy can not afford to ignore. Buying a property that is already approved for financing is a huge advantage in today’s market.
We are approved to represent buyers of HUD homes. Feel free to contact us with questions or to arrange a showing of a property of interest.