H.U.D. Foreclosures - A Great Opportunity to Save
What are HUD Homes?
A HUD home is a residential property acquired by The Department of Housing and Urban Development as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim. Many times, these home will need a little TLC to get them into livable condition, but there are always a handful of homes that are basically brand new and in move-in condition.
Who can buy a HUD Home?
Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors. If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma , HUD could sell a HUD home at a discount to you!
How are HUD Homes Sold?
HUD Homes in Texas are available for purchase by the public through a bidding system at BidSelect.com. Any offers on these homes MUST be submitted through a licensed real estate broker that is registered with HUD. HUD WANTS you to be represented when buying one of their homes. Your brokers fees are paid by HUD at closing so you as the buyer, incur no costs for the representation. While you can review HUD homes online, you will need the assistance of a qualified Realtor to tour the homes. Your Realtor can also suggest pricing strategies as HUD's list price is rarely the lowest price they will accept. We have a formula to calculate the lowest price HUD will accept on their homes; this formula has allowed us to win approximately 85% of the bids we place for our clients. To the right, you'll see an updated list of available HUD homes in the Katy area. This list is automatically updated each week.
Are there any special programs?
HUD homes are generally underpriced for the market at the time they are listed. Properties in designated areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives online.
Should I get a home inspection?
We always recommend you get an independent inspection regardless of what type of home you buy. Typically your inspection will take place after your offer has been accepted. In the case of HUD Homes, it's important to remember that these homes are always sold AS-IS, without warranty. HUD WILL NOT make any repairs nor pay to correct any problems. HUD perfoms their own preliminary inspection and summarizes their findings in the Sellers Disclosure which is available online.
What about financing?
Although HUD does not offer financing directly, some of our homes qualify for FHA-insured loans. Shop around for a lender to find the best loan terms. When searching for homes, it's important that you watch for required repair escrows on these properties. If you choose a home that requires a repair escrow, AND you're financing the home with an FHA loan, you'll be required to put up 110% of the escrow amount up front to guarantee those repairs are made. If you are financing through any means other than FHA or VA, those repairs do not have to be made prior to purchase.
A Friendly Note from At Home in Katy
If you're a first time homebuyer or an investor looking for inexpensive properties, HUD homes may be just what you're looking for. We'll be happy to sit down with you and explain exactly how purchasing a HUD home works, and how it could save you thousands of dollars.
