What is a HUD home? How do I buy one? Should I consider this type of housing? All of these are probably at the top of your list of questions when it comes to investing in a HUD property. It’s true that the HUD home buying process is different than traditional home sales, but purchasing this type of home isn’t all that challenging and can be a fantastic way to break into homeownership. Keep reading for the answers to many of your HUD home questions!
What exactly is a HUD Home?
The Federal Housing Administration (FHA) is the part of the US HUD (Department of Housing and Urban Development) that provides federal mortgage insurance. If a foreclosed home was purchased with an FHA loan, the lender can file a claim for the balance due on the mortgage after the foreclosure. The FHA pays the lender’s claim and then transfers ownership of the property to HUD, which then sells the home.
How much do HUD homes cost?
HUD homes are appraised and then priced at fair market value for their location and condition. The price of a home in need of repairs is adjusted downwards to reflect the investment the new owner must make to make improvements. It’s important to note the HUD is not simply giving homes away, but you’ll be able to find competitive prices on these properties.
Will HUD make necessary repairs to a home?
No. HUD homes are typically sold as-is. As the new owner, you’ll be responsible for all repairs and improvements. For this reason, it’s crucial to have a thorough home inspection before making an offer.
How do I buy a HUD home?
Here’s where things differ a bit from traditional sales. HUD foreclosures are sold using an online bidding process, and you must hire a licensed real estate agent to assist you with the process. There’s an initial offer period where preference is given to buyers who intend to make the HUD home their primary residence. If the house doesn’t sell during that period, it becomes open to real estate investors looking for an income property.
Depending on your budget and long term plans, a HUD home can be a fantastic investment and a great way to expand your housing options in tight markets. Metrowest specializes in helping buyers with HUD homes – if you’re interested in checking out options in the metro area, give us a shout!