Keys to Buy A HUD Home… A brief overview of the buying process for HUD homes. There are a few things you need to know up front about buying a HUD home, since the procedures may be different than those used in buying other types of homes. HUD however, has made the procedure as efficient and convenient as possible. Here are some things you should know: Buying a HUD Home is Different than Buying Other Types of Homes Closing on a HUD home - Closings are generally within 45-60 days and held at the closing agent office
- HUD will pay some closing and sales commission costs
Generally, HUD will pay up to 5% of your broker commission cost, plus up to 1% for the mandatory BLB commission. In addition, HUD will pay up to 5% for standard closing cost items (excluding the closing agent fee which is paid for separately). These items are designated by the buyer and may include discount points, loan fees, title costs, surveys, and other items. HUD will also generally pay any outstanding seller costs such as outstanding tax or utility bills related to HUD's ownership.
After your contract has been received correctly, it will be signed by First Preston on behalf of HUD and returned to your agent at The REALNET Team along with a contract acceptance letter. The letter will give you up to 60 days to close. Once you are ready to close, you and your agent must schedule the date with the closing agent indicated on the letter, who also receives a copy of your contract. First Preston does not set the closing date; it is up to you.
When a property still remains unsold after the 45 day initial listing period, the M&M Contractor will re-analyze the case as soon as possible. The price may be reduced, and for five days after the price reduction, all bids are considered simultaneous, with owner-occupants given priority. After the five-day initial reduced price bidding period, then bids are reviewed daily and the acceptable bid that offers the highest net value to HUD (regardless of occupancy) is acknowledged.
The initial listing period, which is generally the first public listing for HUD homes, is 45 days. During this time, priority is given to owner-occupants who are buying the home as their primary residence. Priority is given for the first ten calendar days as follows:
All owner occupant offers received during the first five days of this initial period are considered to be received simultaneously. On the first business day after this period, these bids are reviewed to determine the highest acceptable offer to HUD.
If there is no acceptable bid, bids are reviewed on a daily basis for the remaining five days. Bids received at different times during the day will be considered received simultaneously, and the highest acceptable net bid will be acknowledged on the date opened. If the property remains unsold after ten days, it is made available to investors as well, and bids are reviewed on a daily basis. (Investor bids may be placed at any time but are not reviewed until the 11th day, if the property is still listed.)
An owner-occupant purchaser is defined as a purchaser who intends to use the property as his or her principal residence, a governmental entity, or a private nonprofit organization. Governmental entities include those with general governmental powers (e.g., a city or county), as well as those with limited or special powers (e.g., public housing agencies).
All offers must be submitted by a HUD Approved Broker through an electronic bidding process. Most offers are made via computer through the Internet. The electronic bids are stored in the computer system and, at the appropriate time, calculations are automatically performed to determine the apparent highest net offer to HUD.
You should contact The REALNET Team. The REALNET Team will have a list of HUD homes from the MLS, which contains detailed information on the home. You may also see a HUD or First Preston sign on a home; these are placed on homes after the initial inspection and mean that the home is being readied for sale. To find out if the home is actually for sale, consult The REALNET Team.
When you buy another type of home, you can usually negotiate the contract and other transaction items over an unspecified period of time. When purchasing a HUD home, this is not possible. In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid/contract will be cancelled and the home returned to the market. Once your bid is acknowledged as the highest net to HUD, for example, The REALNET Team will and must send in a correct contract within 48 hours or the bid will be cancelled. Generally, closing must take place within 45-60 days. First Preston cannot change the HUD deadlines.
It is extremely important to understand that HUD homes are sold in "as is" condition. This means that the condition of the home when you see it is what you will be buying. HUD makes no warranties, does not guarantee the condition of any home, and does not verify that it complies with any local code or zoning requirements. You must make any necessary repairs after the purchase. HUD may make, or give you an allowance for, major system or safety repairs only if you are purchasing with an FHA-insured loan. It is very important that you get a Home Inspection by a licensed professional prior to closing on the sale.
HUD homes are initially priced for sale at the appraised market value. The buyer may offer any price, but HUD will only agree to offers that provide an acceptable return. Price reductions may take place later if the home does not sell.
HUD homes can be purchased by anyone. While many homes are affordable, this is not a low-income program. Owner-occupants have priority during the original bidding period (first 10 days). After that, investors can then bid along with owner occupants. The REALNET Team Sells HUD Homes! We are a HUD Approved Broker. Click Here To Search For HUD Homes! |