Rarely does dealing with the government make you money.  But in the case of HUD-owned properties, you can get a deal on a home now, get a low downpayment and make money. 

HUD properties convey all kinds of negative images – this is NOT today’s HUD home.  HUD properties today can be found in any area, any price, new houses, old houses, some need work and some practically move-in ready.  With the amount of foreclosures out there, HUD has reluctantly been forced into the real estate business, just like banks and others.  But unlike banks, they are not for profit, which positions them well to have some of the best deals out there.  Here is what you need to know about buying a HUD foreclosure home.

1.  You can get a real deal.  You do need to bid on the property, but most times, HUD foreclosure homes are priced below appraisal and market value.  Again, HUD is not for profit.  They can do deep discounts.  Plus, they will come down off list price and list the homes very agressively.

2.  You have to follow HUD procedures and contracts.  It is their way, but it is clearly provided and understood. Once you understand their ways, it is pretty smooth.

3.  You will find out if you get the property right away - within a day or two.  That beats all the banks who take sometimes weeks to get an answer.  You can wait 2-3 weeks to get a contract signed by HUD and another few weeks to close.  But typically from bid to close is less than 60 days.  And you can close even earlier.   

4.  IT IS EASIER to get a loan on HUD properties, because most are already FHA insured.  And if they need some work and you need money above the sale price to fix it up, if the property is designated, you can get a 203k FHA loan for above the sale price to fix up the home on most HUD homes.  Also, some HUD homes can be purchased for $100 down or 3-3.5% down.

5.  You can buy the home as a investment or as an owner-occupant.  There are certain times when you can bid on the property.  HUD gives owner-occupants the first 30 days before they let investors in the game.

6.  You can inspect the home - if you are an owner occupant – after the contract and still get your money back.  Plus, HUD gives you all kinds of reports, appraisals, property conditions to review.  These are not a substitute for your own personal inspection and viewing of the home, but it gives a little more information.  If you are an investor, you can inspect the property, but you can not get your earnest back if you back out of the deal.

7.  HUD is an “as is” purchase.  No matter what you find at an inspection or viewing, they will not fix anything, negotiate or reduce the price.  You can merely cancel the contract if you are an owner occupant if you do so within the timeframe the contract indicates. 

8.  There are extra charges that you will normally not incur in another sale transaction.   You will have to absorb all the title fees (but HUD gets huge discounts on this.  And as with many foreclosures, you need to pay for village inspections.  If you want to get an inspection, you will need to pay HUD’s field manager to dewinterize and rewinterize the property.

9.  HUD properties are always title clear.  HUD and their agents are very good about paying all the past bills, assessments, etc.  You never get stuck with anything you don’t know about. 

10.  You must use a HUD certified buying agent.  There is no cost to you for that as HUD pays commissions.  I would recommend that you use one that has some experience buying HUD properties.  HUD contracts and rules are a little tricky, but once you have mastered them, it is no problem . 

There are goods and bads in buying a HUD foreclosure home, but buying a HUD home can be a very lucrative investment and/or get you a great home in record time with the lowest down payment available.  I have had a few customers successfully buy HUD homes for personal or investment and of the homes we saw, they were by far the best deal.

If you are interested in investing in or buying a HUD home, call 888-788-9544 for more information.