Buying a home from the government (Department of Housing and Urban Development – HUD) always seems like a great way to save cash. But before you dive into purchasing a property in this manner you should understand the process.
This is what you need to know.
Homes are Sold As Is
Once you’ve bid on a property you need to have followed a thorough checklist to avoid any nasty surprises down the road. Simply because HUD homes are sold “as is”. There’s no warranties being made about the condition of the home, and the HUD is certainly not going to improve or repair the home before signing ownership to you. That’s why you should get an inspector in to uncover all that’s wrong with the property, and then get contractor to quote you on their service. You can them make an offer based on this information.
You’re Bidding For A Home
You’ll need to find an HUD real estate agent who can make a bid on a your behalf. For a specified period the HUD will accept closed bids before deciding on a buyer. They’ll either choose on that gives the highest number or the most profit. If they don’t find a suitable buyer the process will simply continue until they do. But this time they won’t wait to open bids. If your bid is accepted you’ll have 30 to 60 days to close. When your real estate will get the standard fee for their service.
Your options are cash or mortgage. You’ll need to make an earnest money deposit with the bid, so you should be sure that if you’re going the mortgage route you’ve been pre-approved. That’s because if you fail to go through at closing (if your bid is accepted) you’ll lose your earnest money deposit.
So, it’s better to know that come closing you are most certainly going to have the money.