- HUD properties can be insurable, insurable with escrow, or uninsurable.
- An FHA appraisal has been completed in as-is condition. HUD will share this appraisal with buyer’s lender if financing FHA.
- If financing conventional your lender will require an appraisal.
- 7-10 day sealed bid period for owner occupants, daily to owner occupants until day 15. If still available open to investors on day 16.
- 5 day sealed bid period for uninsurable properties then on day 6 open to investors.
- Not always distressed properties.
- Earnest money will be a cashier’s check for $500 for properties under $50,000. Properties $50,000 and up will require $1000.
- Earnest $ is non-refundable in most circumstances.
- Buyer must have preapproval letter.
- HUD sells properties in as-is condition and will not make repairs unless a safety issue and then only for what’s broken.
- If a property is insured with escrow, it is for only those things that are broken, not cosmetic. HUD makes an evaluation of repairs and assigns a dollar figure to those repairs based on an inspection that has been completed.
- Insured with escrow is additional $ brought to closing to take care of repairs to finance FHA. The buyer must pay these additional funds at closing and the repairs are completed within a certain time period after closing (usually 60 days). If the purchase price is lower than the appraisal amount this escrow amount could be financed into the loan.
- Uninsurable properties are usually over $5000 in repairs and would require a cash buyer or 203K financing.
- If the repairs are more, buyer pays the difference.
- If the repairs are less, the credit is applied to the loan.
- If an investor chooses to have a home inspection and determines to cancel the contract, the earnest $ is forfeited.
- $100 down program could apply to HUD properties that are insured or insured with escrow. The buyer pays the full amount of earnest $ then is reimbursed the difference at closing (applied toward the purchase). This enables the buyer to finance the full purchase price less $100. The buyer is still responsible for the escrow amount for repairs.
- If your bid is accepted for more than the appraisal value, the buyer is responsible for the difference in price at closing.
- 48 hours to return original documents and earnest $ if bid is accepted.
- Buyer is responsible to pay to have utilities turned on for inspections, de-winterized and to be re-keyed at closing. Once the inspections have taken place, the buyer must have utilities turned off within 72 hours of inspections. The home will have to be re-winterized at the buyer’s expense as well. If financing conventional and an appraisal has to be done, this would be a good time to complete while the utilities are on.
- HUD will pay up to 3% of the purchase price in closing costs.
- HUD will pay buyer’s title expenses if buyer uses HUD’s title agency.
- HUD contracts will close 45 days from bid acceptance. If the contract date has to be extended, a fee is incurred and paid by the buyer.
- Owner occupants must occupy the home for at least 1 year and cannot purchase another for 2 years after purchase.
- Investors can purchase any number of HUD homes.
If you suspect the area may be in a flood zone, the buyer must do his due diligence to check into this. HUD cannot guarantee the condition of the home due to flooding.
*Information believed to be accurate but not guaranteed.