Buying a HUD home isn’t as daunting of an experience as you may think, but there are differences between this type of transaction and traditional home purchases. 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? Read on to find out!
What is a HUD Home?
The Federal Housing Administration (FHA) is a part of HUD — the part 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 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 a bidding process, and you must hire a licensed real estate agent to assist you with the process. There’s an offer period, during which sealed bids are accepted through your agent. At the end of that period, all offers are opened. HUD usually accepts the highest bid or the bid that brings them the highest net.
Depending on your budget and long-term plans, a HUD home can be a fantastic investment and 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!