Is Buying a HUD-owned Home Different From Any Other Home Purchase?
October 07, 2016
We often receive calls from homebuyers wondering exactly how to purchase a HUD home (property owned by U.S. Department of Housing and Urban Development). They want to know the difference between buying a HUD home vs. purchasing a “regular” home. But here’s the thing---HUD homes are regular homes!
Here’s a quick overview of how similar the process is:
Making an Offer: You will make your offer through your REALTOR, however be sure your REALTOR is HUD Registered! HUD properties are listed at market value. Just as with any other home purchase, however, you can make an offer above or below the list price, based on what you feel you can afford and what you feel the home is worth to you. That offer may be accepted or rejected by the asset managers on behalf of HUD, and you can then decide if you want to place a new offer.
Home Inspections/Repairs: HUD homes are “sold as is.” You will not be able to negotiate repairs when making an offer. However, HUD does provide a Property Condition Report on their website to help you make your decision. Just as with any other home purchase, buyers are strongly encouraged to have their own home inspections done, and HUD provides time for that to be completed.
Financing: You can use FHA or conventional financing if the property and buyer both qualify, or you can make a cash offer. Just as with any other home purchase, it is the buyer’s responsibility to obtain financing. HUD does not offer direct financing or lease-to-purchase. Homes that don’t qualify for conventional financing due to property condition may still qualify for an FHA 203K rehabilitation loan.
Owner-Occupant vs. Investor: For the initial exclusive listing period, priority is given to owner-occupants. HUD will only accept offers from someone who is going to live in the home for at least one year. After this exclusive listing period concludes, investors can also make offers. So if you’re looking to “flip” a home or use it as a rental property, you will need to wait for the exclusive listing period to end before making an offer.
So you see, buying a HUD property is not some mysterious, complicated process. It’s not all that different from buying any other home. You can find a wealth of information on buying HUD properties on their website: www.hudhomestore.com.
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