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5 Things To Know Before Buying A HUD Home
So you've begun your home search online, are finding some properties that you think are interesting in the area you'd like to live and BAM! Up pops a listing that seems to be very well priced. Yes, it needs a little works, but you're not opposed to a little sweat equity. But wait, it's a HUD owned property.
What's that mean?
And more importantly, what's that mean to you?
A HUD listing is a property (1-4 units) which was purchased as an FHA insured loan and has been foreclosed upon. The property is owned by a bank/asset manager and is being offered for sale either with or without FHA financing. Sometimes repairs can be wrapped into the loan (not completed by the owner, but financed into the balance of your new loan).
If you're thinking of buying a HUD home, here are the first things you need to know:
1. In order to submit an offer on a HUD property you must work with a registered HUD Broker who has been registered on the HUD Homestore website and has an NAID #
2. You will have to have Earnest Money in the form of a Cashier's Check at the time you make the offer. For properties in WA, most of them will required a $1000 Earnest Money amount.
3. You can complete a home inspection, but the owner will not make any repairs. If the property qualified, you can make your offer subject to special 203k financing which will allow you to roll your repairs into the balance of your loan.
4. You will need to be purchasing the property as your own, meaning to occupy as an owner in order to bid within the opening time period. Investors can only submit bids once the restricted time has passed.
5. It may be necessary for you to move quickly. When a property is first listed for sale, it will have an opening "bid" period where by HUD will accept all bids electronically. (submitted by your broker). They will accept the highest "net" offer if it meets the required threshold. If not, they can extend that time frame, or open the bidding to non-owner occupants.
Of course, this is an overly simplified explanation of the process. Because not every buyer or property is the same, we often have to make adjustments and determinations as to whether each HUD listing will work for that client. This is part of the service we provide through the representation of our buying clients.
If you need more information or have any additional questions, reach out to us, we're happy to help!
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