HUD homes can be a great deal for owner-occupant buyers and investors alike. However, if you’re considering a HUD home for investment purposes, you’ll have to wait your turn. If you’re not familiar with this type of property, a HUD home is when a government-insured loan (FHA) gets foreclosed and the Federal Housing and Urban Development (HUD) pays the defaulted loan off and then puts the home on the market.
HUD homes are available for investors to purchase; however, priority is given first to owner-occupant buyers (people who are planning to live in the property after it is purchased), non-profit organizations, and government agencies. Following the priority process, unsold properties are available to all buyers, including investors.
How is buying a HUD home different for an investor?
The process for buying an owner-occupant HUD home and buying a HUD home as an investor is different.
Earnest Money:
HUD considers investors to be savvy and experienced when buying a home. That means they will keep an investor’s earnest money if the investor backs out. HUD allows an inspection to be done, but if an investor backs out due to inspection issues, HUD will also keep that money.
Title Insurance:
HUD does not pay for title insurance. You may use HUDs title company or your own, but you will have to pay for title insurance and closing fees.
Inspections:
HUD does not turn on utilities for inspections. It is the buyer and their agent’s responsibility to request permission to turn on the utilities and then turn them on.
If you understand the process and how it works, investing in a HUD home can be a great opportunity. If you’re interested in checking out HUD home investment opportunities in the Denver area, contact Metrowest . We specialize in these types of sales and would love to help you start the process!