Q. What is a "HUD Home"?
A. A HUD Home is a property that was previously financed with an FHA insured mortgage and where the owner has defaulted on the loan. The lender, then, forecloses on the home. FHA pays the lender what is owed; and the lender transfers ownership to FHA/HUD. Then, HUD sells the it at market value.
Q. How are HUD Homes priced?
A. HUD Homes are priced at FHA appraised value.
Q. Will HUD accept bids lower than appraised value?
A. HUD has accepted many bids lower than appraised value. There have also been many bids at or ABOVE the appraised value.
Q. The "as-is", "no warranties" part scares me. How can I protect myself?
A. There are three ways of doing so. First you can look at the Property Condition Report that I have available for you. Secondly, if you place a bid that is accepted, you have fifteen days to have your own home inspection by whomever you choose. As an owenr-occupant bidder, you would have your earnest money returned if there is an issue that concerns you.
Q. What can or should I bid?
A. You can bid whatever you like. However, it is important to keep in mind that you might be competing against other bids. All bids are sealed so you do not know that bids, if any, you are up against. I personally encourage people to bid what they feel the comfortable bidding and what they feel the property is worth to them. Also, HUD has a reserve they must meet on each property. If your bid is lower than the reserve price, they will turn down your bid. The reserve is not published.
Q. Who can buy a HUD Home?
A. Anyone who has the cash or can quailfy for a mortgage can buy a HUD Home.
Q. Is it true I can buy a HUD Home for a dollar?
A. No. HUD sells homes at market value - that means that the price is set based on the price of similar homes sold in that area.
Q. If the HUD Home needs repairs, will HUD make them?
A. HUD Homes are sold "as-is", without warranty. That means that HUD will not pay to correct any problems. Buyers are encouraged to get the home professionally inspected. Houses built before 1978 may have lead based paint, which can cause harm to your family; so be sure to read about what you need to do to correct it.
Q. How do I buy a HUD Home?
A. HUD Homes are sold through Participating Real Estate Agents, like myself. A Participating Real Estate Agent MUST submit your bid for you. The real estate agent's commissions are usually paid by HUD.
Q. How can I find out what HUD Homes are for sale?
A. A complete list of HUD Homes for sale is available at www.best-assets.com. The complete list of homes for sale is updated daily on that website. Also you can find some Twin Cities Metro HUD Homes right here. Each week I choose the HUD Homes that I want to market, and go to those homes and take lots of pictures and notes in order for me to create a listing for selected HUD homes.
Q. How can I get a loan to buy a HUD Home?
A. HUD does not make loans directly. You can contact a HUD approved lender, who will take you through the steps and actually make the loan. If you do not know of any HUD approved lenders you can contact me for a list that I have worked with in the past.
Q. What are the rules a HUD approved broker/agent must follow when advertising HUD Homes?
A. Brokers must follow the advertising guidelines established by the Fair Housing Act. In addition a HUD approved broker/agent may not advertise in such a way that would mislead buyers to believe they are the exclusive listing agent of the seller or affiliated with HUD or BestAssets. All advertisements should include a reference to HUD; business cards or flyers are not allowed to be placed in HUD properties; also, language such as "distressed home" is not allowable. If these rules are followed there is usually will not be a problem advertising HUD Homes. To make this very clear, a HUD approved broker/agent, like myself, must represent you if you choose to purchase a HUD Home. I am not the only HUD approved real estate agent that can sell you a HUD Home, there are several others. I hope based on my experience, customer service, and knowledge of the HUD buying process that you choose me to represent you in your transaction.
Q. What is the earnest money required for a HUD Home?
A. Effective April 19, 2002, the required deposit will be $500 when the purchase price is $50,000 and under and $1000 when the purchase price is over $50,000. HUD and BestAssets will only accept copies of Earnest Money in the form of certified funds including cashier's check, money order, or Bank certified check. Earnest money in the form of personal checks or copies of deposit slips are not acceptable. |