COMMON QUESTIONS ABOUT BUYING A HUD HOME in louisville
Q. What is a "HUD Home"?
The Federal Housing Administration (FHA) is the organization of the U.S. Department of Housing and Urban Development (HUD) that insures certain mortgage loans for lenders. If the lender forecloses on the loan, FHA repays the balance of the loan to the lender and the title to the home reverts to HUD. HUD then sells these homes at market value.
Q: How do HUD's Management and Marketing (M&M) Contractors acquire the house?
HUD has assigned the responsibility to maintain and sell the homes to Management and Marketing (M&M) Contractors. They are responsible for the upkeep of the property, and the required documentation associated with marketing and selling the homes according to HUD policies and guidelines set forth in the contract with the federal government. The M&M Contractors act on HUD's behalf, but HUD retains the title to the home until it is sold.
Q: Who can buy a HUD home? Are they only available for low-income buyers?
All HUD homes are offered without regard to race, color, religion, sex, national origin, handicap, or familial status. Anyone who is pre-qualified for a mortgage loan may offer to purchase a HUD home. These homes are not exclusively for low-income buyers, but most are regarded as affordable for low to moderate- income purchasers within the market areas where they are located. There is an initial period when only owner occupants are allowed to purchase, after which time investors may also buy. No employee, relative, or business relation of the M&M Contractor or its subcontractors may purchase any of these properties.
Q: How do I start the process of buying a HUD home?
The broker must be registered and have a NAID with HUD to sell these homes. Agents can help clients get pre- qualified for a loan, show the available homes to clients, write a Sales Contract for the client to sign, and place an offer by electronic bid on behalf of a client.
Q: Is it possible to get a list of the properties in my area?
Yes. You may keep informed about available HUD homes by viewing the property listings on this web site. Simply click on HUD Properties For Sale. This information is real time, so always check before you go out with your client to see properties. You may also want to set up watchlists for areas of interest.
Q: Some HUD-owned houses might not be in good condition. Does HUD make repairs?
HUD homes are sold "as is," without warranty. That means HUD generally will not make repairs except to preserve and protect the property or to eliminate a major safety issue. Known defects are reflected in the price and stated in the listing on the website, as well as on the Property Condition Summary sheet.
Q: How do I make an offer to purchase? What happens after I place a bid?
A HUD registered real estate agent or broker must place an offer in the form of an electronic bid on behalf of the client.
If the bid offers the highest price, net of closing costs and commissions, above the minimum acceptable price, then the bid will be acknowledged, assuming all other considerations are met. The bid will become the acknowledged bid listed in "Search Offer Results," allowing the agent or broker 48 hours to deliver to the appropriate Regional Office the complete and correct Sales Contract package with all addenda signed, a copy of the loan pre-qualification letter, and the earnest money check. A thorough description of how to complete this all-important contract package and get it in correctly and on time is given in the Guidebook for Real Estate Professionals available on this site. Only when a complete and correct contract package is submitted on time will the M&M contractor sign on behalf of HUD as Seller. Otherwise, your bid may be cancelled and the property may be offered to the next highest acceptable bidder, or it may be placed back on the market for others to bid.
Q: Can a HUD home be purchased as an investment property?
Yes, but owner occupant purchasers are given priority for the initial listing period that the house is on the market for the general public. Owner occupants are persons who will affirm in writing that they have not purchased a HUD owned property in the last two years and they will live in the home as their primary residence for at least one year. After the initial listing period, investors may purchase the houses for resale or for rental.