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.