Tips for Buying a HUD Home
Buying a HUD (U.S. Department of Housing and Urban Development) home is a great way to purchase a home and may save you some money. However, if you don’t know what you are doing buying HUD homes can also lead to financial difficulties. Before making any HUD home purchase do your homework and make sure that you know and understand the HUD home buying process. To help clarify the HUD Home buying process ForeclosedHomes.com has compiled these HUD home buying tips:
When can I bid on a HUD home?
Interested buyers can place bids on HUD homes during a 10-day period that starts on a Friday and closes on the Sunday of the following week.
Making an offer
Buyers will want to make offers based on ‘as-is’ appraisals determined by HUD. HUD will accept no offers that are lower than 50 percent of their appraisal. If you offer more than the appraisal price, you will be required to bring the difference to the closing, as that amount cannot be financed.
Will I need to get the home appraised?
It is not necessary to have a HUD home independently appraised.
Whose offer comes first?
Owner occupants always have first priority; however, if their offer is not accepted or received by the end of the offer period, the HUD home is then open to all bidders.
Is there any way to have my offer considered before others?
HUD reviews all offers simultaneously. The offer with the highest net profit for HUD will be selected.
Can I see the property before bidding?
Interested parties can request a property condition report for every HUD home or view it on HUD’s website. If your offer is accepted, HUD recommends hiring an independent home inspector to inspect the property.
How much will I need to put down?
If the home sells for less than $50,000, you’re required to make an earnest money deposit of $500. HUD homes priced greater than $50,000 require a $1000 deposit.
Do I need to submit more than one offer?
There is no need to make more than one bid. HUD reviews offers each Monday following the close of the 10-day bidding period regardless of when the submission date and time.
Should I be pre-approved first?
You should obtain preapproval for a mortgage before submitting an offer on a HUD home.
Can I start improving the property right away?
If HUD accepts your offer, you cannot make any repairs or home improvements before closing and taking possession of the home.
Buying a HUD home has its own rules and protocols. We hope that these tips for buying a HUD home have shed some light on what can be a confusing paper chase!