On the house hunt in Denver? Chances are you’ve seen a few HUD home listings as well as real estate (or bank) owned properties. These types of housing are a bit similar; however; they aren’t identical. If you’re interested in either of these types of properties, it’s important to know the difference – here we’ll provide a breakdown on how HUD homes and REO homes differ.
HUD homes actually belong to the U.S. Department of Housing and Urban Development (HUD). This is the organization in charge of public housing and community development. While they offer a variety of programs aimed at helping homeowners avoid foreclosure, if that can’t be prevented, HUD sells the foreclosed homes to recoup the loss.
REO stands for real estate owned, but in reality, it’s actually the bank that owns of these types of properties. When the homeowner forecloses, the lender often attempts to sell the home in a foreclosure auction with the opening bid equal to the loan balance. If the home doesn’t sell, the bank regains ownership of the home.
Both types of properties are generally sold “as-is”, which means neither owner will be making extensive repairs before selling.
HUD homes are sold through a bidding process. In the initial stage of bidding, the organization gives priority to buyers who intend to use the home as a primary residence. All offers are reviewed at the same time, with the highest bid winning out.
On the other hand, no priority is given to owner-occupants when it comes to REO properties. If you’re searching for an REO property as your primary residence, professionals recommended providing a good faith-deposit of 1 percent of the purchase price along with your offer. At this time, the bank may accept or counter offer.
Ready to start checking out REO and HUD properties in the Denver area? The pros at Metrowest specialize in these types of sales and we’d love to help you start the process!