4 Tips for Buying a HUD Home
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A HUD home is nothing more than a house that was purchased with an FHA loan that has since fallen into foreclosure.
(I’m not sure why these homes aren’t called “FHA foreclosures,” which would be more intuitive for home buyers and investors, but the Department of Housing and Urban Development [HUD] is the federal office that takes ultimate responsibility for FHA and its home loans gone wrong.)
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.”
You may make an online offer during the offer period. At the end of the offer period, all offers are opened and considered to be received simultaneously. The highest acceptable net bid is then accepted, and the buyer’s agent is contacted.
If the home isn’t sold in the initial offer period, buyers may submit a bid any day of the week, including weekends and holidays. Bids are opened the next day.
What you probably don’t know is that if no one makes an offer for a HUD home within a certain amount of time, HUD lowers the price. The price of the HUD home continues to drop until an offer is made and accepted.
How do you find out if your bid was accepted? It’s your agent’s responsibility to check the website to see if your bid was accepted and to complete all the necessary paperwork.
Companies like PEMCO Ltd. are direct contractors with the government. They list and sell these homes online from HUD. Only agents who are registered with HUD may represent buyers and investors in the purchase of these properties.
There used to be a different site for different areas of the country, but it’s been consolidated into one website: www.hudhomestore.com.
How can you navigate the website and find the right home to buy? Follow these four tips for buying a HUD home:
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
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