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