How to Buy a HUD House, What do I Need to do to Buy a HUD House?

How to Buy a HUD House, What do I Need to do to Buy a HUD House? I get asked this question a lot. The public perceives HUD as selling property at reduced prices and people want to take advantage of this. The HUD buying process is a bit different than buying a fair market listed property or any other bank owned property, and there are additional expenses most buyers aren't aware of.

Q: How do I get started in buying a HUD House?

A: The first thing you need to do is talk with a lender if you aren't paying cash. You will need to get a pre qualification letter from your lender. The second thing you need to do is find an agent that is registered to bid on a HUD House for you. An agent that is qualified to this will have an NAID number. HUD will require the agent to provide this number before your bid is submitted. At Cedaredge Land Company we have our NAID number and are very experienced in helping buyers purchase a HUD House.

Q: I've found an agent...so now what?

A: Now you will need to find the home you want. You can search yourself at HUDhomestore.com, and your agent can also search here. Once you find the home you want, your agent will submit a bid for you online. Your agent will need specific information from you to do this including your social security number. After your bid is submitted, you will have to wait for 12 hours to several days to hear if your bid was accepted.

Q: My bid was accepted...now what?

A: There will be a HUD purchase contract and other forms for you to fill out. These forms will be emailed to your agent. HUD wants the contract package and earnest money received at it's office within 48 hours of bid acceptance. This includes your lender letter saying you are pre qualified to buy this property. HUD won't except a fax or scan. They want original documents. NO EXCEPTIONS. A HUD experienced agent will be able to walk you through the paperwork and will know to use blue ink so HUD doesn't deny the contract package.  YES...blue ink is required. Personal checks aren't accept. Make sure you use certified funds for your earnest money. If you make a mistake on your original contract package, HUD will deny it, and give you a second chance, but that's all you get.

Q: My paperwork is submitted...what do I do now?

A: You wait for HUD to send an email to your agent saying your contract package was accepted. This usually takes 1 to 2 business days after HUD receives the package. Once your agent gets that email, you have 15 days to get the utilities turned on and to do an inspection. HUD has a form for this, and this is basically a form that gives you permission to turn on all the utilities. You must fill this out and send it via mail to the HUD specified address. Don't delay in this, because it can take a while for HUD to get back to you. HUD will generally allow you to keep the utilities turned on for 48 hours. Turning on the utilities is something, you, the buyer pays for. If the house needs to be re winterized after your inspection, HUD will require you to send a cashier's check for $150 with your utility form.

Q: Do I have to do anything about title insurance?

A: That's a great question. HUD does require the buyer to purchase title insurance. You can use HUD's title company or a local title company of your choice. In my experience my local title companies handle the HUD transactions very well, and I like working with a local company.

As you can see, HUD has additional costs that most buyers aren't aware of upfront. During the whole process, you and your agent will want to stay in close contact with your lender and make sure everything is happening on time. HUD will generally give you up to 45 days to get your loan and close the transaction. If you need to extend closing...well you guessed it, HUD has a form for that.

At HUD's sole, subjective discretion it can agree to extend your closing date for another 10 days, or it can deny this request. I've never seen HUD deny an extension, but it can. There is also a charge of $75 dollars for each day of the extension you use. Of course you must pay for all ten days up front and submit your certified funds check with your HUD request for extension form. If you don't use all ten days, HUD will credit you for the remaining balance.

Debbie Laity is an agent experienced in helping buyers wanting to purchase a HUD foreclosure. HUD has some very specific time frames and policies that must be met, and you will want an agent that has the experience to make your HUD Home purchase a smooth one.  

 

 

I've lived on Colorado's Western Slope for over 22 years. I love this area and all it has to offer, and I enjoy sharing what I know about my home. As a real estate broker, I also love to share my expertise in this area as well. If you need any real estate information for Montrose County, or Delta County, Colorado...please give me a call.

 

Debbie Laity

 

GRI, SFR, REO Specialist, CNE, AHWD, BPOR, e-Pro

Broker Associate, Cedaredge Land Company

970-589-2886 Cell

For a complete list of Delta County and Montrose County property for sale click here.

For more information on local events and happenings click here.