Hud Homes In Utah-What You Need To Know!
As you may or may not know, HUD homes are actually FHA or VA loans that have been foreclosed by their respective lenders and returned to Housing and Urban Development (get it…HUD) for resale. These homes can range in price from $50,000- to 750,000 (in Utah) and can generally be bought for under market value. And, as you see us leaping for joy (that was metaphorically, not literally although this is indeed a time to leap for joy), this is a very good thing!
Now, so that you are not thinking that there is “free lunch” to be had when buying a Hud home, there are a few things that you need to know when contemplating this kind of foreclosure.
Hud foreclosures are different animals so be prepared
to jump through some hoops!
- Hud homes are bought through electronic bids on the internet. Pick a realtor who has done these before to make sure that you get it right! (Oh yeah…we have done lots of them!)
- Don’t think you can lowball a Hud offer or you may not even get looked at! Take it from me, there is a formula for winning a bid on Hud homes. Give me a call to find out more!
- Hud will pay your closing costs (up to a certain amount) but you must include this in your offer
- You must still include $1,000 earnest money if you win the bid. Now this means that you are depositing this money and it will go toward your down payment…it doesn’t disappear into thin air like some rent deposits tend to do.
- If you win the bid on the foreclosure, you will be required to submit the paperwork within 48 hours. That means you must have all the i’s dotted and the t’s crossed on the original sales contract and FED EX it to the office of the asset manager within 24 hours (along with earnest money in the form of a cashiers check or money order) so they can receive it next day. They don’t get it on time….they go to the next bidder.
- Take a good hard look at the property before you make an offer on a Hud foreclosure. Should you win the bid, you will have a limited time to do inspections. It will cost you around $400-500.00 to do a home inspection for you must pay ahead of time to dewinterize the property then to Rewinterize it once you are through.
(Note also, that HUD fixes nothing but will escrow for repairs. In the listing they will show what their inspectors have found and escrow an amount they approve to fix it. This will be added on top of your loan, and if you find other things that would need to be fixed that they have not disclosed, you can increase that amount. Call us for more info on this subject at 801.819.9005)
- You must be prepared with a pre-qualification letter to send in with the sales contract. If you have not been to a lender, choose one who has worked with Hud homes, and get pre-qualified to make sure you are comfortable with payments, and to know what you can offer. If you need help, we have a great lender to recommend . Give us a call and we will give you his info! (801.819.9005)
- While you can use all varieties of loans (including Utah Housing), make sure your lender is on top of the time it will take to close. Hud allows 45 days to close and charges $50 per day for late closing. That can add up to a lot of extra money that could be used for more pleasant purchases…like paint, new artwork, or a fridge for your new home.
- Remember that with a HUD home, you can’t break the contract for cold feet…well, you can, but you forfeit your earnest money…that’s why there is usually a 15 day period for bids to come in. Once that time is up, Hud opens all bids at once and awards the property to the bid that gives Hud the most bottom line (translate money).
So, see the home with your Realtor a couple of times, then make your decision. Your Realtor (well at least we do this) will help you define your needs and wants, look at the property with an objective eye, and will give you their opinion as to the pros and cons of a property which will help you make an educated decision. Now, if you are ready to get started, give us a shout, and we’ll get a list of Hud Homes to you right away with no obligation, no cost, no brainwashing, and we don’t bite (well, Steve might, but I NEVER have). Give us a call with questions…cause…well…we Love ’em. 801.819.9005
Til next time, ciao!