Buying HUD (Department of Housing and Urban Development) homes isn’t necessarily a way to get rich quick. These homes are supposed to be sold at market value,Buying HUD Homes As Investments Articles after all, which would seemingly make the great deals you hear about a myth. However, there are some profit opportunities here.
One of the reasons you still find good deals on HUD homes – even though they are supposed to sell at market value – is that they are sold “as is.” These are houses that have been foreclosed on and repossessed, so the previous owner may not have had the means nor the motivation to properly care for the home. They often have enough problems to scare away most home buyers.
What does this mean? It means that due to the condition, the market value may be low compared to properly-maintained homes. This can mean an opportunity for an investor who is willing to fix a few things. For example, to the general public, a “problem house” can be worth $40,000 less than surrounding homes, while it may take only $10,000 make it look good again.
Buying HUD Homes
What is a HUD home? It is a house that has a HUD-insured mortgage loan on it. When the owner doesn’t make the payments, HUD pays the lender what is owed, and then takes ownership of the home. They try sell it quickly, and at market value. Virtually anyone who can pay cash or get a loan is eligible to buy these houses. (HUD employees and relatives of HUD employees are eligible, but must receive written approval from the Director of HUD’s Office of Single Family Asset Management in order to purchase a HUD-owned single family property.)
HUD homes are found in all sorts of neighborhoods, although most are meant to be affordable to low-income and moderate-income families. These are homes that generally sell for the same as surrounding homes (except when they need work). To find HUD homes in the price range you want, then, you simply look for neighborhoods with homes in that price range.
If A HUD house need fixing up the asking price will reflect that. HUD may offer special incentives such as an allowance to upgrade the property, a moving expense allowance, or a bonus for closing the sale early. The houses are sold “as is,” but HUD will allow you to get professional inspections prior to making an offer. The cost of these will be yours, however, whether or not you make an offer or buy the home.
On most sales, you can request that HUD pays all or a portion of your financing and closing costs. Essentially you just make an offer as you would on any property, except that HUD homes are typically sold in an “Offer Period,” at the end of which all offers are opened and the highest reasonable bid is accepted. If not sold in the initial Offer Period, you can submit a bid any day of the week, including weekends and holidays, until the home is sold. If your bid is accepted, your real estate agent will usually be notified within 48 hours.