Hello & Welcome Back to #FabulousFriday! Many buyers shop for great deals on the real estate market. In fact, we often get asked about foreclosed properties. One of the options is HUD homes which are homes which have been acquired by the U.S. Department of Housing and Urban Development. Read on to find out how to buy a HUD home:
HUD homes are homes acquired by the U.S. Department of Housing and Urban Development (HUD). If a foreclosed home was purchased with a loan insured by the Federal Housing Administration (FHA), the lender files a claim for the balance due on the mortgage. The FHA pays the claim, then transfers ownership of the property to HUD, which sells the home.
HUD homes are priced at fair market value for their location based on appraisal. Teachers and police officers are given a 50 percent discount on HUD homes. Investors often purchase HUD homes to fix up themselves and sell at a profit. HUD homes are sold as-is – HUD is not responsible for repairs and improvements.
You can view HUD listings on their Web site at www.hud.gov/offices/hsg/sfh/reo/homes.cfm. The HUD Web site lists registered HUD real estate brokers, because only they can show you a HUD property.
HUD foreclosures are sold using a bidding process. There's an Offer Period, during which sealed bids are accepted from agents. HUD accepts the highest bid offered. Unlike conventional home sales, there is no negotiating on price between buyer and seller.
Before submitting a bid, buyers must be pre-approved for financing.
Making a Qualifying Bid
With guidance from your real estate agent, you can strategize and make a qualifying bid. Like other home purchases, you can buy a HUD home with cash, or with mortgage financing. Mortgage-backed bidders are more limited on how much their lenders may allow them to bid on a property, however, reflecting the property’s appraised value and the potential buyer’s own financial circumstances. Cash bidders don’t have the same restrictions, so they may have a better chance of winning their HUD home bid.
As your HUD-approved real estate agent will tell you, if you are planning to live in the home, it is advantageous to bid early. The best deals are usually early in the auction, during the auction’s “owner-occupant” period. An owner-occupant owns the property and resides at that property, which HUD finds most acceptable, so bids accepted during this 15-day period are usually the most favorable to buyers. If no buyer is selected during this time, investors will then be granted the opportunity to bid.
Also keep in mind that if HUD decides not to accept any offers from home buyers, it has the option to sell the house to another government agency — for as low as $1! – to provide low-income housing or to fulfill some other aspect of HUD’s mission to benefit the community.
Eventually, all successful bids are located on the Housing and Urban Development site, so you’ll be able to see how much HUD homes in Virginia are selling for during the auction process, and this may help you and your HUD-approved real estate agent to craft your future bid and win your dream home. A Shaffer agent can outline the details needed to purchase one of these properties, including the bidding process and any upfront expenses needed to make a succesful bid.
It may not be easy to buy a HUD home in Virginia, but it can be done. you just need the right help when you want to buy a HUD home to fit your specific needs. Call your friendly Shaffer agent today to find out how to buy your dream home.
See you next Friday. Warmly, Susan