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Expect Big Savings With HUD Homes

While lenders are responsible for the majority of foreclosures, they are not the only ones to do so. In some cases, the government itself, through various agencies, can initiate the foreclosure process. At the forefront of this effort is the Department of Housing and Urban Development (HUD). As such, the homes they foreclose on are called HUD homes.

HUD Homes Explained

HUD is part of a huge government-run housing program that targets low- to moderate-income families, as well as first-time homeowners, offering them the opportunity to achieve the American Dream of affordable homeownership.

How does the government come to own repossessed homes? Some properties are insured through a HUD mortgage. When this property is foreclosed, HUD pays the amount owed to the lender. Expenses are recovered by auctioning the foreclosed property below its market value.

In this way, lenders get away with your money back without a hitch. HUD homes sold at auction often sell well below their appraised market value. This translates to a lot of savings for prospective homeowners and investors.

Buying HUD Homes

If you have the money or qualify for a mortgage, you have the option of purchasing HUD homes. However, HUD does not provide the financing, so you will have to apply for a mortgage elsewhere. Lenders are often the people to turn to for this. However, if you have the qualifications, you can finance your new home through an FHA-insured mortgage.

HUD homes are sold “as is” with no warranties guaranteed by the auction. Some houses will not be in perfect condition, requiring minor or major repairs. Offers are accepted during an offering period established by HUD. After this period, all bids are examined and the highest bid wins. If the foreclosed property is not sold within the bidding period, bids will be accepted on any business day.

Unlike short sales and foreclosures, HUD homes are relatively straightforward. Buyers don’t have to go through hoops, which is good. Real estate agents are typically notified within 48 hours if their offer is accepted.

The buying process

HUD homes for sale are listed on HUD’s website. Only real estate agents can bid, so you should hire one if you are interested. He will set up and present your offer for you.

If your offer is accepted, your real estate agent will help you with the process. The settlement date is generally set at one or two months. To add even more savings, HUD typically pays the seller’s commission, including all other sales commissions, up to 6 percent.

Please note that owner-occupants of the listed properties are given priority within the first 10 calendar days. All offers received within five days of this period are reviewed on the sixth day. The highest bid from the net owner-occupant bidder wins. If there are no offers within this period, daily offers from investors, among others, will be accepted. Only after the 10-day period will investor offers be considered.

About 30,000 single-family homes are on HUD’s inventory nationwide, including territories like the Virgin Islands, Guamand Puerto Rico.