So this post might be a little long, but I wanted to walk you through the process if you’re interested in buying a HUD home, because it’s a little more complicated then just buying a home off of another person.
First off, what is a HUD home? A HUD home is a home that is acquired by HUD from a foreclosure on an FHA-insured mortgage. You can sometimes get amazing deals on a HUD home.
You can view HUD homes that are currently available at this website:
Just put in your state, and zip code, and you can view their inventory.
If you see a property you like, after you click on it, you can look under “Addendums” for more information. Usually it will say if anything is wrong with the house, what kind of financing it would be approved for, and instructions for bidding.
Yup, HUD is a bidding process.
If you’re interested in bidding, FIRST get a pre-approval letter from your lender. Next, you can let your agent know how much you would like to bid. Your agent can run a comparable report to show you what other homes are worth in the area, and how much homes have been selling for to give you a better idea. If you’re in the Columbus area, let me know (I’m an agent!) and I’ll send you over some reports.
Something to also consider, is that HUD deducts the agent’s commission from your offer. So say you bid $150,000 on a house. HUD will deduct the agent’s commission (6%), so the offer that they will see will be $141,000.
Once the bidding is over (Period Deadline), you will be notified pretty shortly if you’ve won or not. With my home, I knew within 5 hours of the deadline.
If you’ve won, the next part is to submit the contract. Your realtor should’ve had you complete the contract prior to bidding. It makes things 100x easier. You have two days to have the contract submitted, along with any earnest money. I had to mail mine to Philadelphia, so having everything ready before hand saves a lot of time.
After HUD receives it, and if everything looks good, you’ll receive a notification that that the contract is complete, and they will send over the executed contract, which you can then send to your lender.
The one process I HATE when it comes to HUD homes, is that they give you a three day window to have utilities turned on (if they are off), de-winterize, get your appraisal done or home inspection done, then have utilities turned BACK OFF so that they can re-winterize…all in 3 days! I won’t tell you that that is easy to do because it takes a lot of phone calls and everyone on the same page to get this accomplished. You’ll want some wine for this.
After that, the process is pretty easy. If everything goes well with the appraisal and home inspections, the rest is just waiting on your lender to process everything, and get ready to close!
I was able to get my home for $155k in a neighborhood that is selling for around $180k, so the hassle is worth it. Finding a home that you can fix up, and build equity is one of the most important things you can do. You’re spending a LOT of money on your home. Why not make a smart investment in the process?
If you need any additional information on HUD homes, or how to go about making a smart real estate investment, please feel free to message me! I’m happy to help!
Oh, and only 8 more days until I close on my house! I can’t tell you how excited I am!