Are you thinking about purchasing a HUD home in Arizona? There are many HUD homes for sale in the Phoenix area compared to a few years ago when there were less than a handful!
Some things you should know when wanting to bid on a HUD home:
- What is a HUD home? When someone with a Federal Housing Administration (FHA) insured mortgage can't meet the payments, the lender forecloses on the home; FHA pays the lender what is owed; and then the United States Department of Housing and Urban Development (HUD) takes ownership of the home. Then HUD sells it at market value as quickly as possible.
- You must submit your bid with an agent or broker who is registered with HUD.
- Anyone who can pay cash or qualify for a mortgage can buy a HUD home. (Proof of funds are required for cash and a copy of a loan approval or LSR is required if you are financing.)
- HUD homes are sold on their website at "AS-IS" fair market value. Fair market value is determined by a licensed FHA appraiser and that appraisal can be obtained by the buyer's lender if that buyer wins the bid.
- A buyer can offer more than the "AS-IS" price as long as they have the cash to cover the overage.
- HUD will not make any repairs to the property. Nor will the warranty the property. Purchasers are advised that there may be code and/or zoning violations on these properties and that it is the responsibility of the purchaser to identify these violations.
- HUD does an inspection on the homes at the time they list them. This inspection report is posted in the property listing on their site for everyone to see. Buyers are very strongly encouraged to have homes inspected by a qualified home inspection company themselves once their bid is accepted and not rely fully on the HUD inspection of the home.
- Access to the home-All purchasers MUST be accompanied by a broker or agent when viewing any HUD home listed for sale. Buyers may not enter a house without their broker/agent for any reason prior to closing, even for inspections. HUD registered agents have special keys to access these homes.
- Escrow funds- In a typical transaction, the agent would collect a check from their buyer at the time the offer was signed for the escrow deposit. HUD works a little differently. The buyer will obtain their Earnest Check by Certified Funds made payable to the buyer's name AND HUD immediately AFTER their offer is accepted by HUD. The agent then has to overnight the sales packet with that check so that HUD receives it within 48 hours.
All in all, HUD seems very complicated when you first look at it but if you have an agent with some experience, it can make the process much simpler.
IF you have any questions, feel free to contact me or a HUD Registered agent in your area. If you would like a list of HUD homes for sale in a particular city in Arizona, please email me at melindaedenfield@msn.com and I will send you those listings.
HUD currently also has a $100 down FHA program available. Email me if you would like more information on that program.
Have a wonderful day!
Melinda
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