Some buyers may think buying a HUD home is a complicated process. You’re not alone, many real estate agents also feel the same way as traditional paperwork doesn’t always apply and there are additional government forms that are required. When purchasing a HUD (US Department of Housing and Urban Development) home remember there are strict timelines that need to be followed. Additionally when making an offer on a HUD home for sale you’ll realize the offers go straight to HUD and not an agent. we’ll talk more about this later.
Here’s more information on Buying a HUD Home and HUD’s GNND Program for teachers and first responders!
HUD Homes are priced to sell quickly, in fact some are even priced less than appraised value. This means some deep discounts for both investors and home buyers. In addition to offering properties at highly discounted rates, HUD also has financing incentives. HUD is currently offering special financing to home buyers that only requires $100 down! The qualifications for the loan are the same as a FHA loan. There is also a FHA 203 option (similar to a construction loan) available for homes in need of serious repair.
Buying a HUD Home & The Offer Process
Agents and buyers don’t need to be intimidated by the HUD home buying process. As with anything the first time you do something new you’ll likely feel uneasy, as humans we often push away things we don’t want to deal with such as new things. Buying a HUD home is actually a very easy process, in fact when a buyer wants to make an offer on a home you simply complete the HUD purchasing form and submit your offer online. Another great thing about the HUD home offer process is the best net dollar to HUD offer wins. What this means is that if a buyer doesn’t need closing costs over a buyer that does then the buyer with the cleaner offer will win.
HUD Homes Offer Tip: Agents, you can also negotiate your commissions when you submit your offer online, remember the highest “NET” dollar to HUD wins so think smart.
One thing buyers and agents need to be aware of when submitting offers to HUD for review is their black and white policies and process. For instance, once your offer is accepted online you’ll have 48 hours to get your completed signed contracts to HUD for review and executory signatures. HUD will not think twice about moving onto the next qualified offer if you’re offer packet is not complete with the items they request in your offer acceptance email. As an agent, make sure to double and triple check your work prior to submitting your contract package to HUD. If HUD rejects a contract package, you may have the opportunity to fix your mistakes and resubmit but don’t take this lightly as their are no guarantees.
Let’s skip ahead a bit… you’ve sent your completed package into HUD and they’ve replied with seller signed copies.
Congratulations you got your offer accepted, now is when the real fun starts. HUD has some very tight guidelines when it comes to their contracts so please make sure you read what you’ve signed very carefully. Agents may want to prepare a timeline to stay on track when assisting clients with HUD offers. Items like inspection period, mortgage contingency dates, etc will al be included in the contract you sign so please pay extra attention to those items. The escrow company that the seller chooses may be in or out-of-town, regardless of their location it’s a company that HUD has chosen to do their files and it’s safe to say they’ll be very proficient in the process so if you have a question on the process you can also talk to the escrow agent.