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Q. What is a "HUD Home"?
When someone with an FHA-insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then it is sold at or around market value as quickly as possible.
Q: Who is eligible to purchase a HUD home? Are they only for low-income buyers?
Anyone is eligible to purchase a HUD home, provided they have sufficient funds. These homes are not exclusively for low-income buyers, but most are affordable for low to moderate-income purchasers.
Q. How do I find a HUD home?
You must use a HUD-registered local real estate broker to place a bid for you on a home.
Q: Some of these homes may not be in good condition. Does HUD make repairs to these homes prior to sale?
HUD Homes are sold "as-is," without warranty. That means generally, HUD will not make repairs except in specific cases to eliminate a major safety or health issue. However, any known defects in the condition of the house are reflected in the purchase price.
Q: How do I place a bid? What happens when my bid is acknowledged?
Your real estate agent or broker will place the bid for you through our Internet bidding system. If your bid is the highest net acceptable to HUD, subject to certain restrictions, you must send in a correct contract through your agent within 48 hours. Otherwise, the property may be offered to the next bidder or placed back on the market. Only a correct contract, signed by “First Preston” on behalf of HUD and returned to your agent, constitutes a sale.
You must close the sale, usually within 45 to 60 days. Until the sale is closed, you may not do any work or use the home in any way, since you do not own it.
Q. Does HUD pay any costs toward my purchase?
Yes. In order to facilitate sales, HUD will pay, for owner occupants, up to 5% in broker commissions plus up to 1% for the BLB commission; HUD will also pay up to 5% in closing costs. For investors (who do not plan to occupy the home), HUD will pay the same commission and closing costs in most areas except in Nevada and Arizona, where HUD will pay up to 2.5% in closing costs.
Q: Can I buy a HUD home as an investment?
HUD Homes are initially offered on a priority basis to owner occupant purchasers (people who are buying the home as their primary residence) for a 10-day period. Following the priority period, unsold properties are generally available to all buyers, including investors.
Q: What else should I know about buying a HUD home?
There are many other things a prospective purchaser should know. An informed consumer is our best buyer! |