Hud Homes: Make Your Offer
A HUD home is a residential property that has been aquired by HUD through a foreclosure on an FHA-insured mortgage. HUD stands for Housing and Urban Development. Once HUD has the property they offer it for sale so that they can recover the loss on the foreclosure. HUD properties normally need some repair. Anyone can purchase a HUD home that is for sale by the U.S. Government but you must go through a broker or a real estate agent that is authorized to sell the HUD properties.
If you find a HUD home that you want to buy, your real estate broker will submit an offer or bid. HUD homes are usually sold in an offer period, at the end of which all offers accepted and sale goes to the highest (reasonable) bidder. If the home isn't sold in the initial period, you can submit a bid until the home is sold, any day of the week, even on weekends and holidays. Once a bid is accepted, your real estate agent will be contacted within 48 hours.
The Department of Veterans' Affairs (VA) handles the resale of foreclosed homes which were under VA guarantees or VA financing. If you are interested in purchasing a VA foreclosure, your real estate agent must prepare the Offer to Purchase and Contract of Sale VA form. This form will be submitted to the listing broker for approval.
A Real Estate Owned (REO) or a bank owned property is one that returns to the bank after an unsuccessful foreclosure auction. Usually, the amount of money owed to the bank is higher than the equity in that property. The bank will usually try to sell the property at the higher possible price, and will most often counter your starting offer.
Keep in mind that bank foreclosures are not always a bargain. There may be liens against the property and there may be someone still living in the property. Banks always sell a property in "as is" condition so your offer should include an inspection contingency period in case the inspections reveal problems that the bank won't repair.
Do always your home work before you make an offer. Always check some other homes in the same area to see it their price compares. Account for the cost of refurbishment and in no account engage in a bidding war, which could easily bring you to pay more and more than the market value. Always inspect yhe property and - before committing - hold the bank accountable for any repair works which may arise.
- Scott Roemermann
