BUYING HUD HOMES
Real Living Petkus has been awarded by Sage Acquisitions LLC (www.SageAcq.com) the designation of HUD Listing Broker in the State of Ohio. If you are interested in purchasing a HUD home either as an owner occupant or an investor, contact us at 937-241-6080 or email: molly.petkus.com. We can help you!
To assist you in understanding the process of purchasing a HUD home, the following information is provided. To learn more about HUD Homes or to perform a search, visit HUD’S website at www.hudhomestore.com.
HUD Home Store is the listing site for HUD real estate owned (REO) single-family properties. This site provides the public, brokers, potential owner-occupants, state and local governments and nonprofit organizations a centralized location to search the inventory of HUD properties for sale. In addition, registered real estate brokers and other organizations can place bids on behalf of their clients to purchase a HUD property. HUD Home Store also includes many informative user-friendly features providing advice and guidance for consumers on the home buying process. Frequently Asked Questions (FAQs) are available online for:
Real Estate Agents
Members of the Mortgage Industry
Nonprofit Organizations and Government Entities
What is a HUD Home?
A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.
The following information is provided as an introduction to the process through which HUD homes can be purchased. You can either scroll down the page, or access specific topics through the following topic menu. Additional links provided in the menu to the right provide access to FHA program and policy information for homeowners, homebuyers, and members of the mortgage lending and real estate industry.
Who Can Buy a HUD Home?
Anyone who has the required cash or can qualify for a loan (subject to certain restrictions) may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.
Should I Get a Home Inspection?
HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get an inspection from a licensed professional home inspector prior to submitting an offer to purchase.
If you are interested in acquiring a HUD Home that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. FHA's 203(k) Rehabilitation Loan is designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property.
What About Financing?
HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender. If you have the necessary available cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. While HUD does not provide direct financing for the purchase of a HUD Home, it may be possible for you to qualify for an FHA-insured mortgage to finance the purchase.
Does FHA Offer Any Special Discount Sales Programs?
FHA REO properties located in designated Revitalization Areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Next Door Initiatives. You can also view maps of REO properties and special programs such as Revitalization Areas with HUD's Single Family Home Locator.
Where Can I Learn About Available HUD Properties?
Any single family property acquired by HUD FHA will display a sign identifying who is managing the property before it is listed for sale. During this time the property is appraised, title issues are resolved, if necessary and a determination is made about the property's eligibility for HUD's discount sales programs. Property listings are posted on HUD Home Store. For more information, contact Molly Petkus, CRS at Real Living Petkus Realtors at (937)241-6080 or email: [email protected].
HUD Home Store Frequently Asked Questions (FAQs): Consumers and the General Public
1. What is HUD? The U.S. Department of Housing and Urban Development. Please visit www.HUD.gov for additional information.
2. Do I need a realtor to place a bid for me? Yes, please contact a broker who is registered to bid with HUD.
3. How do I find a property to bid on? Log onto www.hudhomestore.com to search for available HUD properties.
4. How can I obtain financing for my property? Please contact a lender or mortgage broker
5. Do owner-occupants have a priority in bidding? Yes, there is an initial owner-occupant period set aside at the beginning of the bid process.
6. What is the Good Neighbor Next Door (GNND) program? The good neighbor next door program allows teachers, police officers, fire fighters and EMS personnel to purchase HUD properties that are located in a revitalization area for a 50% discount if they live in the property for 36 months. More information is available online: About Good Neighbor Next Door
7. What are my financing options? You can use FHA or conventional financing to purchase a HUD home. You may also purchase a property with cash.
8. How can I locate a home in a particular area (e.g. by zip code or state)? You may conduct a search by visiting www.hudhomestore.com.
9. What is a field service manager? The Field Service Manager (FSM) is the HUD contractor responsible for property maintenance and preservation services such as: inspecting the property, securing the property, performing cosmetic enhancements/ repairs, and providing ongoing maintenance.
10. What is an asset manager? The HUD contractor responsible for marketing and selling HUD-owned properties.
11. I would like to report a problem with a HUD home in my neighborhood. Who do I contact? Please contact the field service manager or the asset manager assigned to the property. You can find the asset manager by visiting www.hudhomestore.com and searching for the property by street address.
12. I am an investor. When can I bid on a HUD property? During the exclusive listing period, bids may be submitted by Owner Occupants. At the conclusion of this exclusive listing priority period, all general public bids will be accepted.
13. I am scheduled for closing and no one has contacted me. Who can answer my last minute questions? Please contact the asset manager for the property being purchased.
14. Can I have the property reappraised and lower the price of the home? In accordance with Mortgagee Letter 2010-08, a second appraisal may not be ordered simply to support a purchase price that is higher than the value on the current appraisal. A second appraisal can only be ordered to support a higher sales price if there are material deficiencies with the current appraisal. In such an instance, the Direct Endorsement underwriter is responsible for documenting and determining that material deficiencies exist with respect to the current appraisal.
15. Can a buyer elect to use his or her own closing agent? The purchaser can elect to choose any closing agent. However, if the purchaser elects not to use HUD’s closing agent to perform the closing, HUD will not pay for the closing agent to conduct the closing.
16. If I don’t like the home that I chose, can I decline the acceptance? The purchase of the property may be declined at any time, but may be subject to earnest money forfeiture.
17. What is the earnest money held for, and can I get it back? Earnest Money is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious about wanting to complete the purchase.
If the seller accepts the offer, the earnest money is held in escrow by the real estate broker or by a settlement or title company until closing and is then applied to the buyer's portion of the remaining costs. If the offer is rejected, the earnest money is usually returned, since no binding contract has been entered into. If the buyer retracts the offer or does not fulfill its obligations under the contract, the earnest money is forfeited.
18. When can I complete a home inspection on the property? All purchasers are strongly encouraged to perform a walk through inspection at or near the date of your contract acceptance and, again, immediately PRIOR to closing. If a purchaser discovers a property condition that did not exist at the time of sale they must immediately notify HUD's property manager of the damage. The purchaser or agent should complete the Property Damage Report and fax it to the appropriate fax number listed on the form. Reporting the damage does not guarantee the correction of the problem that has been discovered. The lack of written documentation describing property condition at contract acceptance, however, will preclude consideration for repairs or price adjustments in the event of subsequent damage.
Each case will be looked at independently and a determination will be made as to whether the damage will be repaired (or not repaired) or, under some circumstances, credits given at closing. The buyer assumes full responsibility for the property and its condition on the date of closing. HUD assumes no responsibility and will make no settlement for damages reported to HUD after the close of escrow.
19. Can I make repairs to the property if needed prior to purchase? HUD properties are sold as-is with no warranty. No repairs should be performed on a property until after the new owner has taken possession of the property.
20. Does HUD give money for repairs to the property? No. However, a home buyer may wish to utilize an FHA 203K streamline loan to finance repairs on the property.
21. How much money do I have to put down on a home? The answer depends on the type of financing being used. For FHA financed properties, the down payment is 3 1/2 percent (3.5%) of the sales price.