Now that we have looked at several of the incentives that HUD offers for many of their properties it is time to look at the buying process. Buying a HUD property is not a whole lot different than purchasing any other property, but there are some differences and it is important to know these differences.
A current list of HUD owned properties can be found at
the HUD Homestore web site the site is searchable by state, county, city, bedrooms, baths and price range. In addition the site provides important information regarding the listing status of individual properties as well as important information for all purchasers regarding the purchase of HUD owned properties.
All buyers should be pre-qualified with a lender first. When talking with a lender, prospective purchasers should ask them about their experience with HUD owned properties and foreclosures in general. Remember, not every lender allows the incentives provided by HUD, so it is very important that every buyer ask. The lender will issue a pre-qualification letter to the buyer, the buyer should provide a copy of this to their agent before previewing any property. For additional information about mortgages contact
Rhonda McGough with Iberiabank Mortgage. If he buyer is paying cash for the property, they should obtain a proof of funds letter from their bank in the amount of the list price of the property.
Understanding HUD Listing Periods
HUD has three distinct listing periods
Lottery - For many properties HUD will initiate a 6 day lottery period. During this period, offers are only accepted from buyers that qualify for the Good Neighbor Next Door program.
Exclusive - The first thirty days of a HUD listing are reserved for owner occupant purchasers, non profit agencies and government agencies only. No investor offers will be reviewed during this period. No offers will be considered during the first ten days of the listing, although offers can be submitted, all offers received during the first ten days will be reviewed on the 11th day of the listing, this time is known as the
simultaneous period.
Extended - On the 30th day of the listing, offers will be accepted from all purchasers
It is important to note that HUD can, and often does at it's discretion, extend or renew the Exclusive period for any property. In addition, HUD reserves the right to accept or reject any and all offers during any listing period.
Investor purchasers take note: the purchase of a HUD property by a non-owner occupant during the Exclusive period is considered fraud and is punishable by up to 10 years in prison and a fine of up to $250,000. HUD reserves the right to initiate charges against the purchaser, the selling broker and the selling agent for any act of fraud in the sale or purchase of a HUD owned property.
Any licensed real estate agent who is registered with HUD and had completed the proper documentation can show and sell a HUD owned property, however due to the differences in the HUD offer process, all prospective buyers should ask the agent about their experience with HUD owned properties. Examples of questions to ask include questions about the number of HUD properties an agent has sold and the length of time it has been since the agent sold a HUD owned property. Bo Evans Realty is one of the largest seller's of HUD owned properties in Alabama and is uniquely qualified to assist buyers in this purchase, want to know more? Call 1-800-209-4843 or email
Bo Evans.
The Offer Process
Although HUD uses the term "bid" to identify offers on HUD owned properties, this is a bit of a misnomer in that HUD typically will reject any offer that does not meet HUD guidelines in respect to a minimum acceptable
net proceeds to HUD. The purchase of a HUD owned property is NOT an auction.
Once a buyer has received their pre-qualification letter, employed an agent experienced in the sale of HUD owned property and identified a home they are interested in, the agent will provide the paperwork required to make an offer on the property. The primary document is the HUD sales contract. In addition to the purchase price, this document includes several important pieces of information about the buyer such as current address and social security number.
Once the HUD purchase offer is signed by the buyer, the agent is responsible for entering the terms of the offer into the HUD Homestore web site and sending it to HUD. If the offer is accepted, HUD will generate a printable offer with information as entered and any addenda the may be required for the purchase. The addenda differ for types of purchaser. The signed documents, earnest money (certified funds payable to HUD) and approval letter or proof of funds are due to HUD's asset manager within 48 hours of acceptance. Failure to provide these documents as directed will result in the cancellation of the offer.
Next - Buying a HUD Home Part 3 - The escrow and due diligence period
