FAQ’s for Buyers of HUD Homes
For more information on HUD Homes, please visit www.hudpemco.com.
For some buyers, the process of purchasing a home may be intimidating. Development Resource Partners has produced this guide to introduce buyer’s to the process of buying HUD-owned properties. This brochure will give the buyer useful information, but it should not be the buyer’s only resource. It is important for any prospective buyer to select a knowledgeable, qualified agent to help guide them through the process of viewing, bidding on and closing on HUD Homes.
There are a great many benefits to purchasing a HUD Home, not least among them is that HUD Homes can be an exceptional value. There are also a variety of incentives that may be available to the buyer to make improvements to the property that would not be possible through a conventional, private mortgage.
[sws_ui_toggle title=”How to Start” closed=”true” jui_theme=”ui-smoothness” duration=”500″] You will need to contact an agent that is registered with HUD or a Local Listing Broker in order to tour a HUD property. As with any real estate purchase, your agent can help you with the prequalification process. A prequalification letter must accompany any bid. If you wish to submit a bid on a property, the bid must be submitted electronically to HUD by the agent or the listing broker. The representative will assist you in the preparation of all required forms and any additional documentation. This is very important, because if a bid is accepted, the agent has to submit all required paperwork within 48 hours. [/sws_ui_toggle]
[sws_ui_toggle title=”What You Should Know” closed=”true” jui_theme=”ui-smoothness” duration=”500″]Preference is given to owner occupants. Investors cannot bid on a property for at least 10 days after initial listing.HUD Homes are sold “AS-IS.” HUD makes no warranties or guarantees regarding condition, zoning or local codes.“AS-IS” appraisals and termite inspections are available upon request.Property Condition Reports are available for informational purposes.No repairs can be made to the property prior to closing.HUD requires earnest money amounts of $500 for transactions of less than $50,000 and $1,000 for properties that are $50,000+.You will have the opportunity to have inspections performed on your behalf at your own cost. [/sws_ui_toggle]
[sws_ui_toggle title=”Financing” closed=”true” jui_theme=”ui-smoothness” duration=”500″]HUD offers incentives from time to time. The properties eligible for lower down payments, repair escrows or real estate bonus commissions can be found when viewing each property online.HUD also issues ‘codes” with each listing. [/sws_ui_toggle]
[sws_ui_toggle title=”“IN”” closed=”true” jui_theme=”ui-smoothness” duration=”500″]Insurable with a FHA 203(b) Mortgage loan. The property usually meets Minimum Property Standards (MSP) with minimal repairs. [/sws_ui_toggle]
[sws_ui_toggle title=”“IE”” closed=”true” jui_theme=”ui-smoothness” duration=”500″]Insurable with Escrow — eligible for FHA 203(b) loan but needs repairs. Since no work can be done to the home prior to closing, HUD may offer up to $5000 because of some problems with the home. HUD does not pay for the repairs and the dollar amount is added to your loan amount. Your lender holds the money in “escrow” until the work is done and must inspect the repairs prior to the money being released to you. (Repair escrows are NOT available if you finance using a conventional-type mortgage loan.) [/sws_ui_toggle]
[sws_ui_toggle title=”“UI”” closed=”true” jui_theme=”ui-smoothness” duration=”500″]Uninsurable – These properties are generally in need of repairs in excess of $5000 and may qualify for 203(k) rehabilitation loan. The operative word is “may” and is only available if you are going to occupy the home as your primary residence. [/sws_ui_toggle]
Investors must either provide their own conventional loan financing or pay cash. There are some instances where FHA may provide special incentives or financing for investors.
Development Resource Partners would like the opportunity to discuss your real estate needs with you. Please contact one of our agents at 314.395.9905 or on-line here.
DRP is a registered HUD agent and is able to help you with all your home buying and selling needs.