Foreclosures: How to Buy a HUD Home In The Pekin Real Estate Market

HUD property is sold only by the Department of Housing and Urban Development.

HUD is associated with the Federal Housing Administration (FHA). When an FHA-insured property is foreclosed, FHA pays the balance due to the lender and then transfers title of the property to HUD whose responsibility it is to sell the property. Typically, HUD properties are inexpensive because FHA limits the amount of the loan it will insure. Therefore, there are few HUD home in high-cost real estate markets. The property is restricted to residential property (1-4 units). These are the answer to questions you may have about buying a HUD home:

Who can buy a HUD Home?

Anyone with cash or adequate financing can buy a HUD home.

During the initial offer period, sales are restricted to persons who intend to make it their primary residence.

If the home is in a designated “revitalization area” law enforcement officers, fire fighters, emergency medical technicians, and teachers are eligible to purchase properties at a 50% discount.

Persons displaced by hurricanes Katrina, Rita or Wilma, are eligible for HUD discounts.

If the property remains on the market after the initial offer period, Investors are eligible to purchase HUD properties.

Property not sold within six months may be purchased by non-profit organizations and government agencies to create housing for low-income families. HUD sells to these approved groups for $1.

How is HUD property priced?

HUD appraises each property and prices it at the fair market value in its area. If a home needs repair, the price is reduced by the estimated cost of the repairs.

Will HUD make the repairs?

No. HUD property is sold “as-is”. The buyer is responsible for all repairs and improvements.

Where can I find a HUD property?

HUD does not work with individual buyers. You must select a HUD-approved real estate agent to represent you.

HUD maintains a website listing all its properties by state so you can search this listing for a property that interests you. If you are not computer literate, ask your real estate agent to search for you.

Once you've located a property, your real estate agent can arrange to show you the property. Remember, this must be a HUD-approved agent.

How do I make an offer on a HUD property?

Your real estate agent must submit a sealed bid. At the end of the original 10-day offer period, HUD opens all the bids received and generally accepts the one that provides the highest net to HUD. If no bid is accepted, subsequent bids are reviewed as they are received.

HUD notifies your real estate agent of bid acceptance with settlement date … usually within 30-60 days. You are required to submit a final purchase agreement within 48 hours.

Will HUD finance the property?

No. Before you make an offer, you should arrange other financing. Once the offer is accepted, you are obligated to close on the date specified or forfeit your earnest money. So submit a bid only after you know you can get the financing within a relatively short period of time.

Will HUD pay real estate agency fees?

Yes. HUD will pay commissions if the bid specifically includes that provision and the amount of the commission. The amount that HUD has to pay your agent, however, is subtracted from the value of the bid. So, given two identical price bids, HUD would accept the one with the lesser or no real estate agency commission.

Should I have a professional inspect a HUD property?

Yes, definitely. If you are seriously considering bidding on a property, you need to personally inspect the property as well as to hire a professional to inspect it. You cannot accurately estimate the value of the property until you know how much repair work is necessary.

If the property was built before 1978, have the property checked for lead paint. You might also consider whether the property contains asbestos products or other environmental hazards.

Summary

HUD property provides an opportunity for buyers to get a reasonably low-cost home at a reasonable price. The process involves little risk: you are allowed to inspect the property, and gain clean title.

To obtain a FREE list of HUD Homes available in the Pekin Real Estate market, visit us at www.free4closedlist.com or www.livinginpekin.com.