Who can Purchase a HUD Home?
Any individual, partnership or company that can qualify for a mortgage or who can pay cash may purchase a HUD home. In order to place a bid on a HUD home buyers must use an agent registered with HUD. Buyers must also have a pre-qualification letter from a lender, on lenders stationary, or proof of sufficient cash funds in the amount of or greater than the property they are purchasing.
How are HUD Homes Sold?
All HUD Homes are listed on the HUD Home Store Web site and on the Multiple 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. 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 HUD 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 receive any acceptable offers then the price of the property 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 does not mean ownership has been transferred . Purchasers do not own the home until after closing and the property is 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 then submit your bid On-Line. If your bid is accepted the broker will then have 48 hours to deliver your contract to HUD.
What About Earnest Money?
Earnest money is the “good faith” money that accompanies a contract or bid.