Quick Guide to HUD Homes
Quick facts on HUD properties:
There is typically an “exclusive” period initially where only certain people can bid, narrowing down the competition & eliminating all non-owner occupant for profit investors:
2. No escalation clauses are possible. That's a huge disadvantage in a market where median price is above asking price. With the listing agent not receiving offers, you are somewhat shooting in the dark when you make an offer.
3. You can be more relaxed than typical about showing if you request one shortly after listing because they list deadlines that they will respond to a bid on the website hudhomestore.com
4. The offer process is different than normal with a special offer form etc. Example Online Bid Submission offer form (3.17.22)
5. They list a “property condition report” on hudhomestore.com as well. The supposed issues can be wrong in some cases and they can miss problems in other cases. For instance, with my home, HUD said that the plumbing pressure test didn’t pass, but in actuality, a faucet was turned on, messing up the test.
6. The listing agents don’t see the offers, so may or may not know about any offers. In some cases, the buyer’s agent informs them about one, but I don’t recommend that we do overtly.
7. Meaning of insured, insured w escrow, etc.
8. Sometimes you’ll find something about a home sold subject to CFR 206.125
9. Going Below List Price & Price Reductions
10. Sometimes there are incentives for buyers including special financing options, but your lender still needs to be able to do it if you’re using a loan.
These incentive addendums commonly list broker bonuses and buyer incentives on the same form, but you don’t need to do what’s necessary for the agent bonus (i.e. the buyer using an FHA rehab loan) to get the buyer incentive (i.e. a $100 down payment with FHA insured financing).
Additional Information from my continuing education notes in 2018
Images courtesy Hudhomestore.com
More from others:
Investor’s Guide:
http://investfourmore.com/2013/03/the-investors-guide-to-purchasing-hud-homes/
Owner Occupant’s Guide:
http://investfourmore.com/2013/04/owner-occupants-guide-to-purchasing-hud-homes/