This is another topic that to us in the Real Estate industry may seem like common knowledge, we often forget that people not in our industry do not deal with this topic on a daily or monthly basis. We also forget that we have gone to trainings on the topic of HUD homes. This blog, like the ones that we did on Short Sales and Foreclosures is not meant to explain all the details of a HUD homes, but rather answer some of the questions that we are hearing regularly.
What are HUD homes? The simple answer is that they are homes that have been foreclosed on that are being offered for sale by HUD ( The Department Housing and Urban Development). Many of the HUD homes are homes that had FHA financing, but not all of them had FHA guaranteed loans.
How Can I find HUD Homes? There are some websites that show what is available through HUD. In our area you can go to:
All of these sites will direct you to homes that are available in our area. You may also contact any Realtor. HUD homes are listing in the Multiple Listing Services throughout the country. Many Realtors will provide lists of HUD homes and other foreclosed properties to prospective clients.
How do I purchase a HUD home? That is where Realtors like us come in. Most Real Estate Offices have the ability to help you purchase a HUD home. HUD requires that a Real Estate Broker be listed with them and have a Broker ID number. This allows the real estate agents that work for that broker to write purchase contracts for HUD homes.
From there it is really similar to buying any other home, you submit an offer. Unlike a traditional sale, this is all done online initially. Once the offer is accepted, your agent is notified at which time you fill out HUD approved paperwork. Just a hint to make things go more smoothly, HUD requires that the paperwork be filled out in blue ink. That paperwork along with your earnest money in the form of a cashier’s check is submitted.
A couple of the nice things about HUD homes is there is already a property condition report available online for each home. The other nice thing is that for a time period only those looking to live in the home can purchase HUD homes. You’re not competing initially with investors.
How Much Earnest Money do I put down on a HUD home? It depends on the sales price of the home, typically in our market it is $1000. Some market with homes that are listed under $50,000 may require less earnest money.
Do I need to have a home inspection done on a HUD home? My answer is always going to be yes, it never hurts to have another set of eyes look at a property. Please understand, we get nothing from the home inspection or the home inspector. We just want our clients to have as much information as possible when they purchase a home. Buying any home is a huge investment, and as a buyer, you will want to know if there are any needed repairs.
The property condition report is a good resource, but like I said, it never hurts to have a second opinion. You can choose not to, but honestly, I believe that it is in your best interest to have a home inspection done.
Does it take longer to buy a HUD home? Not really it takes about 45 days to complete the transaction.