Hud Homes: Residential Properties For Sale
A Department of Housing and Urban Development (HUD) home is a residential property acquired by HUD due to a foreclosure on an FHA-insured mortgage. HUD offers the property for sale in order to recover the loss on the foreclosure. HUD homes will need some level of repair. While anyone can buy a home for sale by the U.S. Government you must work with a real estate agent or broker who is authorized to sell HUD homes.
In the sale of a HUD home, there is a specified period within which offers are accepted. At the end of this period, the sale is granted to the person with the highest reasonable offer. If the home is not sold within this period, offers will be accepted until a bid is accepted. If you wish to bid on a HUD home, your real estate broker should submit the bid for you. If your bid is accepted, your real estate agent will be notified within 48 hours of its acceptance.
The VA (Department of Veteran’s Affairs), when foreclosing on loans guaranteed or financed by the VA, acquires the properties in question. The purchase offer and sale contract forms should be prepared by a real estate agent, who will submit the offer through the broker who listed it for approval.
A bank owned or REO (Real Estate Owned) is a property that reverts back to the bank after an unsuccessful foreclosure auction. Typically what is owed to the bank is greater than the equity in the property. The bank will try to sell the property at the best price it can, and will usually counter your initial offer.
Bank forclosures are not always the great deal they appear to be. There may be other loans against the property and there is the possibility that there will still be residents on the property after purchase. You should make sure to ask for an inspection period so that you get a chance to investigate for any potential problems as a bank foreclosure will be sold “as is”.
Always do your homework before making an offer. Check other homes in the area to see if they are comparable in price. Calculate the cost of renovation and never get caught up in a ‘bidding war’ because it can easily lead you to pay more than the market value. Have the property inspected and hold the bank accountable for any repairs before committing.
- Scott Roemermann
