In Part Five of this series What happens after you place a bid on a HUD home? we learned the three possible outcomes of placing a bid on a HUD home.
In this chapter, we will assume that your bid was accepted, and that a contract was executed by all parties, and that the sale is moving forward.
The first thing that is substantially different about buying a HUD home than other kinds of foreclosures is that the utilities are not turned on. If you plan on doing an inspection on the property that you placed under contract, you need to get permission from HUD to have the utilities turned on in your name.
In doing so, you will assume all of the risks of anything that could happen as the result of having the utilities turned on, such as an overflowing sink or frozen pipes in the winter time.
You will also agree to turn the utilities off when you are through with your inspection. This becomes the sole responsibility of the buyer to take care of turning the utilities off and on.
If the inspection uncovers defects on the property, they will not be repaired. You have purchased the property as-is where-is and in the condition that it was in when you entered your bid.
In the rare event that a latent defect is discovered of a magnitude that a reasonable person would not expect, there is always the possibility that a termination and release can be negotiated.
In the meantime, you will work with your loan officer if you are getting a mortgage, who, with your agent, will work closely with the closing attorney. HUD assigns a closing agent for each transaction, and if you desire the representation of an attorney you will need hire one other than the closing agent.
When the HUD attorney has completed the title work and your mortgage company issues a "cleared to close," it it time to head to closing for settlement!
Next: Part 7, Closing on a HUD home. Previous: How to bid on a HUD home.
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