While the buying process is different than traditional home sales, purchasing a HUD home isn’t particularly difficult and could even snag you a great deal on a house! Here we’ll give you a quick rundown of some of the frequently asked questions about HUD homes and how to buy them. Is this venture right for you? Keep reading to find out!
What is a HUD Home?
The Federal Housing Administration (FHA) is the part of HUD (the US Department of Housing and Urban Development) that provides federal mortgage insurance. If a foreclosed home was purchased with a loan insured by the FHA, the lender can file a claim for the balance due on the mortgage after the foreclosure. FHA pays the lender’s claim, then transfers ownership of the property to HUD, which then sells the home.
How much do HUD homes cost?
HUD homes are appraised, then priced at fair market value for their location. The price of a home in need of repairs is adjusted downwards to reflect the investment the new owner must make to improve the home.
Will HUD make repairs?
No. HUD homes are typically sold as-is. The new owner is responsible for all repairs and improvements.
How do I make an offer on a HUD home?
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 investor bids.
Depending on your budget and long-term plans, a HUD home can be a fantastic investment and a great way to break into homeownership. Metrowest specializes in these types of sales – if you’re interested in checking out HUD homes in the area, give us a shout!