| Buying HUD (Department of Housing and Urban | | | | offer. The cost of these will be yours, however, |
| Development) homes isn't necessarily a way to get | | | | whether or not you make an offer or buy the home. |
| rich quick. These homes are supposed to be sold at | | | | On most sales, you can request that HUD pays all or |
| market value, after all, which would seemingly make | | | | a portion of your financing and closing costs. |
| the great deals you hear about a myth. However, | | | | Essentially you just make an offer as you would on |
| there are some profit opportunities here. | | | | any property, except that HUD homes are typically |
| One of the reasons you still find good deals on HUD | | | | sold in an "Offer Period," at the end of which all |
| homes - even though they are supposed to sell at | | | | offers are opened and the highest reasonable bid is |
| market value - is that they are sold "as is." These are | | | | accepted. If not sold in the initial Offer Period, you |
| houses that have been foreclosed on and | | | | can submit a bid any day of the week, including |
| repossessed, so the previous owner may not have | | | | weekends and holidays, until the home is sold. If your |
| had the means nor the motivation to properly care | | | | bid is accepted, your real estate agent will usually be |
| for the home. They often have enough problems to | | | | notified within 48 hours. |
| scare away most home buyers. | | | | HUD doesn't loan on these homes, although they do |
| What does this mean? It means that due to the | | | | offer mortgage insurance programs that can help you |
| condition, the market value may be low compared to | | | | get a loan. Contact a HUD approved lender for more |
| properly-maintained homes. This can mean an | | | | information. |
| opportunity for an investor who is willing to fix a few | | | | Investing In HUD Homes |
| things. For example, to the general public, a "problem | | | | HUD gives priority to owner-occupants purchasers. |
| house" can be worth $40,000 less than surrounding | | | | However, if there are no acceptable bids during the |
| homes, while it may take only $10,000 make it look | | | | priority period, unsold properties are then available to |
| good again. | | | | all buyers, including investors. Your real estate agent |
| Buying HUD Homes | | | | should have the necessary details. |
| What is a HUD home? It is a house that has a | | | | There are a couple ways to find out what HUD |
| HUD-insured mortgage loan on it. When the owner | | | | homes are available in your area. You can visit the |
| doesn't make the payments, HUD pays the lender | | | | HUD web site online and see the listings there. A |
| what is owed, and then takes ownership of the | | | | better way is to find a participating real estate agent. |
| home. They try sell it quickly, and at market value. | | | | He or she will know what is for sale, but also may |
| Virtually anyone who can pay cash or get a loan is | | | | know what HUD homes will soon be for sale. In any |
| eligible to buy these houses. (HUD employees and | | | | case, your real estate agent must submit your bid |
| relatives of HUD employees are eligible, but must | | | | for you - HUD generally doesn't accept offers directly |
| receive written approval from the Director of HUD's | | | | from buyers. |
| Office of Single Family Asset Management in order to | | | | When you make an offer, your real estate agent |
| purchase a HUD-owned single family property.) | | | | should help you with any paperwork. The settlement |
| HUD homes are found in all sorts of neighborhoods, | | | | date (if your offer is accepted), will normally be |
| although most are meant to be affordable to | | | | within 30-60 days. You need to arrange financing and |
| low-income and moderate-income families. These are | | | | close the sale within this time, or forfeit your earnest |
| homes that generally sell for the same as surrounding | | | | money deposit (or you may be able to pay for an |
| homes (except when they need work). To find HUD | | | | extension of your sales contract). The selling agent's |
| homes in the price range you want, then, you simply | | | | commission will be paid by HUD but only if you make |
| look for neighborhoods with homes in that price | | | | this a condition of your offer. |
| range. | | | | Of course, when buying HUD homes, you have to |
| If A HUD house need fixing up the asking price will | | | | analyze them like any other investment. If it will be a |
| reflect that. HUD may offer special incentives such as | | | | rental, you have to do the math to see if you'll have |
| an allowance to upgrade the property, a moving | | | | positive cash flow. If you plan to fix it up and sell it, |
| expense allowance, or a bonus for closing the sale | | | | be sure there is a profit after all expected and some |
| early. The houses are sold "as is," but HUD will allow | | | | unexpected costs. Just because it is a HUD home |
| you to get professional inspections prior to making an | | | | doesn't men it's a great deal. |