HUD Properties · Real Estate

What are “HUD homes,” and are they a good deal

HUD homes can be a very good deal. When someone with a FHA loan which is backed by HUD (Housing and Urban Development) can’t meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. It now becomes a government owned home.
HUD obtains a new FHA appraisal to determine the value of the property in its current condition. This becomes the list price of the house. HUD first attempts to sell the properties to owner occupants. If no acceptable offers are made by owner occupants then HUD allows investors to bid on the properties. HUD will lower the list price after some time on the market if no acceptable bids are received. While they want the most money for the property they can get, it’s not like they are going to decide to not sell and hold the property. Therefore, the longer the home is on the market the less HUD will be willing to take for it.
While the price of the house is often lower than other homes in the neighborhood, the property may need work to bring it up to a certain standard. I always tell my clients that if the prior owner didn’t have the money to pay the mortgage, they probably also didn’t have the money to maintain the property either. So just know that there is normally deferred maintenance on these homes.
I always believe it is smart to look around the neighborhood and see what else is available. If the HUD property is $95,000 and needs $10,000 in repairs but the house across the street is in better condition and has a seller who is willing to make some repairs if found on an inspection and is priced at $103,000. The house non-HUD property may be the better deal.
Please note that there are times that it may not be wise to purchase a HUD property over a traditional sale. This properties are sold “as is” with no repairs. If you are unable to make the necessary repairs or the repairs are beyond your budget, it may not be advised to enter into the purchase.
If you have questions about HUD properties or real estate in general please feel free to ask. My phone number is 405-213-2992 or visit my website at http://www.sandiwalker.net

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