HUD Home Horror Stories

By
Real Estate Agent with Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton Licensed in GA & AL

HUD Home Horror Stories.

A few years ago, HUD homes were not very common in Tallapoosa, GA, or even in Bremen, GA.  I never even saw one in Buchanan or Waco.  Now however, HUD homes are everywhere.

HUD has a lot of homes to sell, and they want agents to sell them.  In fact, they offer a bonus in our area to any agent who can close a HUD home.

No one tells you that HUD homes are easy to get under contract, but hard to close.

To make HUD homes easier to get under contract, HUD sends out one of their contractors to do some type of inspectiton.  They list the items they tested, and tell you what was working, and what was not working.  Sometimes they tell you if the appliances are in the home.  Thanks HUD.

HUD also tells you if the home can be purchased with a regular FHA loan, or FHA with repair escrow, or if you need the 203K renovation loan.  That is great, but and this is a BIG but...HUD is often wrong...that is where the horror stories begin.

I have put HUD homes under contract that promote no repairs needed - FHA approved - only to have them fail the appraisal due to repairs needed.  The money spent by the buyer for inspection, appraiser, gas, water, and power turn ons was all wasted, not to mention the time of the agent and the buyer.  No sale there.

I have shown HUD homes listed with small repair escrows that needed extensive repairs far beyond the escrow amount. No sale there.

I have put a HUD under contract that stated not in a flood zone.  Whoops, sorry, it is in the new FEMA flood zone.  No sale there.

Putting HUD homes under contract is easy.  Closing HUD homes is much harder.  Agents and buyers need to be aware that HUD's property condition report may or may not be worth the paper you print it on.

I have a HUD closing scheduled for January 11th, and I will only get a partial bonus, because it took HUD more than 30 days to prepare for a cash closing.  I am just happy that this buyer has cash, and needed no inspections, and no appraisal, and still wants to close.  I just hope that the house is not valdalized before closing.  That is another HUD home horror story.

Do you have a HUD home horror story?  Please share.

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Groups:
Realtors®
"Whacked"!!!
Bananatude
Bartender, Make it a Double
That Darn Home Inspector
Tags:
hud homes
hud home
waco
bremen
buchanan
tallapoosa

Spam prevention
Show All Comments
Rainmaker
1,235,521
Chuck Carstensen
RE/MAX Results - Elk River, MN
Minnesota Real Estate Expert

I have had good luck with HUD homes...even two ugly homes that I got through with a repair escrow.  I like them but know they can go wrong.

Jan 08, 2012 02:39 PM #1
Rainmaker
218,752
Debbie Holmes
John L. Scott - Boise, ID
Gets the job done!

I have had plenty of HUD horror stories but mine all closed.... Eventually..... Sometimes with lots and lots of heartbreak and nail biting...... Sometimes my buyers seemed a bit crazy (as did their agent) towards closing.....

Jan 08, 2012 02:40 PM #2
Ambassador
2,209,980
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

Our local HUD listing agents are nowhere to help when questions come up. I had the buyers for one HUD listing. A stock certificate is needed to transfer the domestic water. The previous owners are gone, and so is the stock cert. The few times the listing agent did return my calls, she played dumb, and pretended like she didn't know about the water situation. I had my buyers prepared for this. They payed to have lost document bond search done, and we got them the stock cert they needed for their water.

In our rural area, another issue with HUD homes is the cost associated with inspection. If the house uses propane for heat, and the propane tank is empty, the buyer has to have propane put in the tank. Most propane companies will only deliver a minimum of 200 gallons. This is very costly to the buyer.

Jan 08, 2012 03:10 PM #3
Rainmaker
181,027
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

Chuck  -  congrats on your good luck with HUD's.  I will have to sharpen my HUD skills.  Any advice would be welcome.

Debbie H. - Congrats on your HUD closings.  The heartbreak and hassle of dealing with HUD's is sweetened with a closing at the end.

Debbie L. - I work in a rural area too, so I feel your pain with propane. (hey, that rhymes)  In our area the minimum is 100 gallons.  The natural gas companies charge a non refundable $60 fee to turn on, so that adds to the expense for the buyer's inspection.

Good luck and good business to you all for 2012!

Jan 08, 2012 03:33 PM #4
Rainmaker
2,560,472
Rebecca Gaujot, Realtor®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Karen, I haven't done a HUD listing/sale and the post and comments I read here makes me want to NOT do one. I would probably refer them to agents who has the knowledge.

Jan 09, 2012 02:11 AM #5
Rainmaker
181,027
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty

Rebecca - Anytime we have to deal with a govt. entity, there are more issues than dealing with a normal seller.   However, I will learn to sell the homes that are on the market.  Have a good 2012!

Jan 09, 2012 02:52 AM #6
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
181,027

Karen Steed

Associate Broker Haralson Realty
Ask me a question
*
*
*
*