Hud HomesBuying a HUD Home
Who can Purchase a HUD Home?
How are HUD Homes Sold?
All HUD Homes are listed on the CLFRES Web site and on th Mujltiple listing Service at their "AS-IS" fair market value. Buyers (with the exception of special program purchasers*) must obtain the services of a HUD Registered Real Estate Agent. All HUD properties are listed for sale to the public on internet listing sites maintained by management companies under contract. Registered Agents may submit bids on HUD properties on behalf of their buyers. The bid that meets the acceptable threshold and has the highest net to HUD receives a provisional bid acceptance subject to receipt of all required documents. Once a bid is accepted an original Sales Contract Package must be submitted to MCB within 48 hours.
How is Fair Market Value determined?
the Fair Market Value is determined, "as is" by a licensed FHA appraiser. Copies of the FHA appraisal are available for the lender by request after a property is under contract. If a property does not receiv e any any acceptable offers then teh price of the poroerty may be reduced.
Does HUD make any repairs to the property?
No. HUD properties are sold in "AS-IS" condition. There are no representations or warranties, expressed or implied, on any HUD property. HUD does not guarantee the condition of any property, FHA-insurable or not, nor whether it meets local codes or zoning requirements. Purchasers are advised that there may be code and/or zoning violations on these properties and that it is the responsibility of the purchaser to identify these violations. Buyers should, and it is highly recommended that they have homes inspected by a qualified home inspection company to satisfy themselves as to the condition of the property at the time of sale.
Access to the Property
Owner Occupant and Investor purchasers MUST be accompanied by a broker when viewing any HUD home listed for sale. Buyers may not enter a house without their broker/agent for any reason prior to closing. Brokers and/or agents must accompany any individual performing services such as home inspections, appraisals, or certifications. Brokers and agents may only use their keys for their own legitimate use. Keys may not be lent to any other individuals associated with any sales transactions.
Repairs, Improvements, or Occupancy Prior to Closing
No work may be done to ANY HUD property prior to the closing on the home. An accepted bid is does not mean ownership has been transfered . Purchasers do not own the home until after closing and the property is recorded recorded in their name. Purchasers may not use the home for storage of personal items or occupy the premises under any circumstances. Occupying or working on a HUD home prior to the close will be treated as trespassing. Failure to abide by this policy can result in the cancellation of the sale transaction, forfeiture of the earnest money deposit and may also involve suspension of bidding privileges for the selling agent and brokerage firm.
How Are Bids Made?
Your broker will prepare a contract and them submit your bid On-Line. If your bid is accepted the broker will then have 48 hours to deliver your contract to MCB.
What About Earnest Money?
Earnest money is the "good faith" money that accompanies a contract or bid. HUD recquires earnest money in the amount of $500 for homes under $50,000 and $1,000 for homes over $50,000 in value.
Understanding the Listings
General Information About Each Property Listing
· HUD Homes are sold without warranty or "as is." No guaranties or warranties are made as available properties are in a variety of conditions and the buyer is agreeing to purchase the property in its existing condition.
· Because HUD homes are sold "as is," buyers are strongly encouraged to get a home inspection by a qualified home inspection company to evaluate the condition of the property and make an informed purchase.
· You may search based on specific criteria such as City, County, Property Address, Zip Code, Price Range, and/or FHA Case Number.
· Properties are listed at Fair Market Value based on the determination of a licensed FHA appraiser.
Property Listing Codes
IN - Insured: These properties are eligible for FHA financing under Section 203(b) of the National Housing Act Program. The purchaser works with an FHA lender to negotiate the loan terms and interest rate. The mortgage may also include mortgage insurance.
IE - Insured with Escrow Repairs: These properties need certain repairs or improvements which are required to meet Minimum Property Standards for an FHA mortgage. These repairs cannot exceed $5,000. These properties can qualify for FHA Section 203(b) mortgages if the purchaser and lender establish a repair escrow at closing which requires the completion of repairs within 90 days of the closing. Otherwise, purchasers of these properties have the option to purchase the properties "as-is" with cash or conventional financing.
UI - Uninsured: These properties need certain repairs or improvements which are required to be repaired to be eligible for an FHA 203(k) rehabilitation mortgage. These repairs exceed $5,000. These properties can qualify for FHA Section 203(k) mortgages if the purchaser and lender establish a repair escrow at closing which requires the completion of repairs within 90 days of the closing. Otherwise, purchasers of these properties have the option to purchase the properties "as-is" with cash or conventional financing.
