Inventory is slowing creeping up in the Denver metro area, but affordability concerns still remain. For this reason, many house hunters – especially first time buyers – are considering adding HUD homes to their search options.
A HUD home a house that was purchased with an FHA loan that has since fallen into foreclosure. It’s important to understand that buying a HUD home is different from buying another type of foreclosed property. For starters, HUD homes are sold exclusively online in an auction process known as an “offer period”. For the first 30 days, only potential homeowners can bid on the property. After 30 days, the opportunity to bid is opened to investors, potential landlords, etc.
If you’re considering this type of home, make sure to follow the tips below. It will make it much easier to navigate the process and find the best home for you!
Find the right real estate agent
Only real estate agents who are registered with HUD may represent home buyers and investors in the purchase of HUD homes online. To ensure the process is as smooth as possible, it’s important to find an agent experienced with these types of transactions.
Inspect the property before making an offer
Just as you would when buying a traditional home, you’ll want to have the property thoroughly inspected. You can get a great deal on a HUD home, but you’ll also need to budget for any necessary repairs, which you’ll find out about during the inspection.
Make an offer
The offer process on a HUD home is probably different from what you’re used to. Offers can be canceled with no earnest money forfeiture. Once an offer is submitted, it can be canceled before the HUD agent opens the bid electronically, or after by sending an email to the company managing the home. Until the contract is signed, the earnest money is not in jeopardy, so there are a few days after the bid is accepted to cancel.
Be ready to close on your HUD home
To expedite the process, you’ll want to have your financial affairs in order and be preapproved for a mortgage. You may be able to qualify for FHA financing or special FHA deals, like the $100 Down Payment Incentive program or the Good Neighbor Next Door program, which offers a discount for HUD homes to law enforcement officers, teachers, firefighters, and emergency medical technicians who meet eligibility requirements.
Buying a HUD home is clearly different than a traditional sale, but it can often result in you getting a great deal on a house. Metrowest specializes in these types of sales. If you’re ready to start checking out HUD home options in Denver, give us a shout – we’d love to help you start the process.