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HUD homes are the topic today due to the increase in HUD homes on the market. First, what is a HUD home?

In simple terms, this is a home financed by FHA that has been foreclosed on and now our government owns the home.

Thanks to our government, these homes have not been marketed as most foreclosures which make them hard to find and more difficult to purchase. Today, at least some of them are being marketed through Realtors which makes them much easier to find. They have also revised how you make offers and the hoops you have to jump through. As I write this, it is just crazy how the process works and all of their rules you have to follow to purchase the home so the government has one less home they own sitting empty, costing the tax payers more everyday.

I am helping a buyer purchase a home through HUD right now. It takes attention to detail and interpretation of HUD instructions to fill out their contracts.

The process: The homes are offered for a period of time. This allows several bidders to make offers on the property before the time period is over. They may at anytime decide to accept an offer which is done on a website. There are several websites, depending on whether another company is managing the asset. Initially the home will only be offered to someone that is going to move into the home. Investors have to wait until the home is open to investors bidding. You can go to jail if you lie about it being your primary residence. Once you have an accepted offer, you write the offer and all addendums required using their forms. It takes several days before you get the contract back with HUD signatures. Once you receive them they will be setting it up with a contracted Title company somewhere in your state. There are several processes that have to be preformed by the title company and HUD which may take 45 days. A buyer should expect possibly 60 days before being able to close and move into the home. If you are in a hurry this may not work for you.

The home: The home will have been inspected by a Contactor hired by HUD to check out the home. This check list will be available to you prior to writing an offer. This in no way replaces a Home Inspection since it may have been done months ago. The home will have had an appraisal done at the time HUD received the property back and will be available to you after the Contract is signed by both parties. The starting price is the appraised value when they put it on the market. The home will not have utilities on and usually they need some repair or updating. HUD will not pay for any repairs. In a down market like we have had the last few years, the home generally will be priced attractive. This home will be approved for FHA financing in most cases and will state that on the marketing material.

To make this process work smoothly I highly recommend using a Realtor that has experience with HUD homes. These homes can be purchased with patience and generally you get a pretty good deal. It can be done!

Rob