| Purchasing a HUD home or a home where the | | | | bids are reviewed and in the event the property |
| mortgage was insured by the FHA and has gone | | | | still remains unsold after general public bids, all daily |
| into foreclosure is not as hard of a process as | | | | bids received by 11:59 pm will be reviewed and |
| you may think. Whether you are looking at a | | | | winning bid results are posted the next day by |
| hudhome as part of the Good Neighbor Next | | | | 1:00 pm. All Bids are reviewed after 1:00 pm on |
| Door (GNND) program or looking to purchase the | | | | Friday afternoon or on Saturday or Sunday on |
| home as an investor, there are some guidelines | | | | the Monday following. |
| these homes have and you should know about | | | | What is the Closing Process? |
| them and adhere to them to ensure your | | | | Once your signed sales contract has been |
| purchase. Here we will go through the process of | | | | submitted through your real estate broker within |
| purchasing government homes from offer to | | | | the 48 hour time period, they will acknowledge |
| closing day. | | | | your sales contract and provide your real estate |
| Who Can Buy a HUD Home? | | | | agent a letter letting you know that you now |
| Anyone can purchase a hudhome and the | | | | have 45 days to close. A closing agent is assigned |
| foreclosed homes may be purchased as an | | | | to you and will work with your broker to ensure |
| owner-occupied home or investors. Buyers who | | | | you close on time with all the required documents. |
| are seeking a foreclosed home on an | | | | It is important to note that if your real estate |
| owner-occupied basis have a priority bid period | | | | agent uses a recommended closing agent, as |
| over investors of ten days. | | | | they will pays the closer's fees. If you use your |
| How Are they Priced? | | | | own closing agent, you are responsible for paying |
| They are sold at market value price or what is | | | | all closing cost fees. |
| called the appraised market value. A buyer can | | | | What Else Should I Know? |
| make any offer, but usually, they will accept only | | | | If you are buying a HUD foreclosed home, they |
| those offers close to the market value price, | | | | will pay up to 5% commission to the selling |
| unless they offer a price reduction on a hudhome | | | | broker, or your real estate agent. They will also |
| that isn't selling. | | | | pay up to 3% of standard closing costs if you |
| All these homes are sold "as is," meaning there | | | | use one of their closing agents. They may |
| are no warranties nor do they guarantee the | | | | reimburse loan origination fees of up to one |
| home's condition. Home inspections are | | | | percent on your new mortgage. You can also ask |
| recommended and required prior to buying a | | | | your real estate agent to explain how earnest |
| hudhome to ensure any needed repairs will fall | | | | money can be returned and what requirements |
| within your budget or if you can roll them into | | | | must be met. Be sure to ask about how earnest |
| your new mortgage. Home inspections are | | | | money is refunded because if this happens to |
| ordered and paid for by the buyer and you should | | | | you, certain guidelines must be followed to receive |
| only hire a licensed inspector. | | | | all or half of your earnest money if you fail to |
| What Are Offer Timelines/Deadlines? | | | | close on the home. |
| Unlike a conventional home purchase where you | | | | What If I Need More Time? |
| and the seller may negotiate for as long as you | | | | If for any reason, you feel you and your real |
| wish, there are certain deadlines. To be fair to | | | | estate agent or financial institution can't complete |
| every buyer, the timelines that you must meet in | | | | the closing process within 45 days, your real |
| your bid otherwise the bid you make on the | | | | estate agent must notify the closing agent at |
| hudhome will face cancellation. For example, once | | | | least two weeks prior to your 45 day deadline |
| your real estate broker sends your bid in to be | | | | and submit the required form "Request For |
| considered and it is accepted as the highest bid, | | | | Extension of Closing Date," and you may get to |
| your real estate broker must send your signed | | | | extend your timeframe for another 15 days. Your |
| sales contract within 48 hours of the bid or your | | | | real estate agent must provide appropriate |
| bid will be canceled-also preference is given to | | | | documentation on why you need an extension in |
| closings within 45 days of bid. | | | | additional to certain monies required. |
| How Are Bids or Offers Submitted? | | | | For example, with every approved extension |
| You must have your bid or offer submitted | | | | request, they must also receive a cashier's check, |
| through a real estate broker who is licensed to | | | | money order or other certified funds made |
| sell a HUD home. Offers are submitted through an | | | | payable to HUD that are considered extension |
| electronic bidding process by your broker. Each bid | | | | fees. The extension fees are based on the |
| is stored within a computer and after the set | | | | contract sales price. For example, if the hudhome |
| time period, the computer calculates the highest | | | | you are purchasing is less than $25,000, you pay |
| bidder automatically. Your broker is then notified if | | | | $10 per day or $150, homes sold at $25,001 to |
| you are the winning bidder and asked to submit a | | | | $50,000 have a $15 per day fee or $225. Homes |
| signed sales contract within 48 hours of your bid. | | | | that sell for over $50,000 and require the 15-day |
| Failure to abide by the 48-hour period will cancel | | | | extension will pay a fee of $25 per day or $375. |
| your bid. | | | | Whether you need to pay $150, $225, or $375, |
| How Are Homes Listed? | | | | these fees must be submitted to in certified |
| All new listings are released weekly each Friday | | | | funds or money order as described above. |
| morning. During the first ten days of any new | | | | Purchasing one of these types of foreclosure |
| listing on each Friday morning, they only accepts | | | | homes requires you to keep in close contact with |
| bids from owner-occupied bidders. It doesn't | | | | your real estate agent, especially if you require an |
| matter if you submit a bid on day one, day five, | | | | extension. All 15-day extensions applied for |
| or day ten, as long as the bid has been received | | | | owner-occupied buyers will have no fees if your |
| electronically, all owner-occupied bids to be | | | | real estate agent provides the documentation |
| submitted simultaneously. On the 10th day, all | | | | indicating a timely loan and loan application was |
| owner-occupied bids will be reviewed and winning | | | | made and that your mortgage approval is very |
| bids are posted daily at 1:00 pm. This initial 10-day | | | | close. Further, if you are charged an extension |
| period is called the Exclusive Listing Priority Period. | | | | fee, all fees are retained whether you close on |
| After the 10-day period has passed and no | | | | time or not and then used as part of your closing |
| winning bids are confirmed, HUD will open up the | | | | costs. |
| bidding to the general public. These general public | | | | |