HUD Homes Could be an Alternative In A Tight Seller’s Market
With the current sellers’ market getting so tight one alternative to home buyers may be to purchase a HUD home. A HUD home is a foreclosed home purchased with a loan insured by the Federal Housing Administration (FHA). The lender can file a claim for the balance due from FHA and the property ownership is transferred to HUD or U.S. Department of Housing and Urban Development.
Buying a HUD home is different from buying any other type of home. HUD properties are sold online in an auction process called the “offer period”. Homes are initially offered to owner-occupants or someone planning on using it as their primary residence. At the end of this offer period all bids are opened as if they were all received at the same time. The highest acceptable net bid is awarded and the buyer’s agent is notified of the winning bid.
If the home does not receive an acceptable bid, it is then opened to everyone including investors and bids are opened the next day until a bid is accepted.
HUD homes are sold as is. They have been appraised and priced at fair market value for the location and condition. If a home needs repair the price is adjusted down so the buyer knows how much of an investment must be made to improve the property. HUD will not make any repairs or improvements.
The condition of a HUD home varies. I have been is some that were in excellent condition and almost move in ready and others that would need appliances, HVAC systems, fixtures, and flooring. If you are considering buying a HUD home make sure you take a good look at the property and gauge what will need to be done to make it livable for you.
HUD homes can be a great value if done correctly. HUD homes are listed on our local MLS, but can also be accessed through hudhomestore.com. Keep in mind in order to place a bid you will have to use a registered agent. For more information on HUD Homes.