MN Hud Homes

How Do I Buy a HUD Home?

Buying a HUD home is easier than you think.  HUD homes for sale are abundant and are available because of an FHA insured mortgage where the owner’s can’t pay and it goes through the foreclosed home process.  The myth that you can buy a HUD home for a dollar is just that a myth.  Hudhomes are sold at the current market value by comparing similar home sale prices in the area where the HUD home is located.  So how do you buy a HUD home?

• Meet the Agent – To find current listings for HUD homes in your area, you need to find a real estate broker who is licensed by HUD to sell their homes.  You can ask any local realtor if they are qualified to sell a HUD home.

• Check Listings – The realtor can walk you through the listings in your area and make appointments for you to visit the homes for an onsite inspection.

• Inspection – After you select a HUD home you are interested in, you should request an inspection.  All hudhomes come on an “as-is” basis meaning an inspection is a good idea and must be paid by you.  Weight the cost of repairs once you get the inspection and consider those in your offer.

• Make an Offer – Once you’ve gone through the inspection process and feel that if any repairs are needed, you can afford them or roll the price of them into a mortgage, you can then make an offer through your agent.  If the offer is accepted, you will start the loan process.  If the offer is rejected, you may have to negotiate to get the price both you and the homeowner agree to.  Make sure you and your real estate agent adhere to an offer’s timeline.  For example if you make an offer that is good for five days and then it is counter offered for five more days, you only have five days to accept or decline the counter-offer so be aware of timelines.

• Find a Loan – You can go the FHA route for a mortgage, pay cash for the HUD home, or shop around for a mortgage that best fits you budget.  You do not have to obtain a mortgage through HUD or FHA to buy the home.

• Home Insurance – You should also seek out a good insurance company for your homeowner’s insurance.  This insurance policy can be paid separately or rolled into your mortgage contract.  The same with property taxes.

• The Closing – Your realtor will draw up the closing papers and be careful to read everything that these papers contain.  Something you should ask for is if HUD will pay your real estate agent’s commission fees.  They often will, but if you don’t suggest it, they won’t either.

• Are There Special Programs? – Yes, firefighters, police officers, victims of Hurricane Katrina, school teachers, and other professionals have an advantage over other occupations or life situations in making a bid on a HUD home.  If a firefighter bids on the same home you want, chances are he or she will get it before you do.

• What If I’m an Investor – Investors can also buy hudhomes, however, first choice is to families who want to use the home as an owner occupied home.  If there is no bid on a home for an owner occupied family, as an investor, HUD homes are great, especially when you think of resale value.

• What Else Should I Know? – Ask your real estate agent to tell you about Borrower’s Rights, the Fair Housing and Equal Opportunity Brochure, and what the Real Estate Settlement process is.  All of these will aid you in making the right decision on your HUD home purchase.

Buying a repo home from HUD can be easy if you find a good real estate agent, ask the right questions, and take the time to consider counteroffers, and get a home inspection.  If you fail to follow these recommended guidelines, just as in buying any home, you may find yourself without all the necessary tools to close the deal and find a mortgage.

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