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Clear Lake Real Estate
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Direct
281-910-2001
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HUD homes and bank foreclosures don't allow the luxury of "just looking." You have to be ready, willing, and able to buy quickly. That's not to say that you have to make an offer before you've had an opportunity to do DD. It's just saying that your FIRST step MUST be getting pre-qualified with a lender. I can help you find a lender that won't let you down. HUD home buyers MUST use a HUD licensed and registered real estate broker. It's in your best interest to talk with a Realtor who is very familiar with the current market price levels, what's selling, what's not selling, cost of repairs, and more. A Realtor can use their working knowledge of real estate learned over many years and hundreds of transactions. A knowledgeable Realtor can help you to avoid the pitfalls and make buying a home a rewarding experience. Call me to discuss your needs at 281-910-2001. HUD Homes HUD homes can be an excellent buy in today’s market. There are many misconceptions concerning HUD homes. No, you can’t buy a HUD home for $1. HUD homes have all been appraised and are listed at the FHA appraised value. You may bid below that value, but bids need to be within reason. Typically, about 40% of HUD homes are bid above the list price. Bidding $10,000 on a $100,000 listing will never work, and is a waste of time and effort. The old saying “If it sounds too good to be true, it probably is.” applies. That doesn’t mean that they’re not excellent values available with HUD homes. Due to restrictions placed on FHA appraisers, the FHA appraised value is typically less than the market value. You just need to work with a knowledgeable real estate agent who can help you separate the best deals to bid based on market values within the neighborhood where you’re interested. As with any investment, there are no sure things. HUD homes represent the opportunity to buy at below market rates. It’s up to you, with the help of your agent, to find the right home that you feel comfortable with. Bidding Bidding on and buying a HUD home can only be done through a licensed HUD registered real estate broker, and agents associated with them. The buying process is different than a “regular” single family home listed by your local MLS. HUD homes are sold “As Is” through a special bid process. HUD homes are initially listed at the "as is" appraised market value. The buyer may offer any price, but HUD will only agree to offers that provide an acceptable return. The amount of the acceptable return is not available. Price reductions may take place if the home does not sell so view property listings weekly to monitor inventory and listing prices. What this means to you is that every HUD home has been appraised by an FHA approved company and listed at the appraised market value. The appraised value may be lower than the actual market value. Prices The prices and condition of HUD homes are as different as MLS homes. With the recent “sub-prime mortgage” crash, many HUD homes are only a few years old and in excellent condition. Since all HUD homes were originally financed by FHA, they all fall within the $271,050 mortgage limit. Repairs HUD Homes, like the majority of property re-sales, require some level of repair. FHA’s Streamlined (k) program allows the buyer to finance both the purchase and the cost of minor repairs and/or upgrades through a single mortgage. While there is no cap on repairs for the Standard 203(K), the Streamlined (k) allows for repairs from $1 up to $35,000. For the Streamlined (k) option, homebuyers identify their repair needs, which may include: new carpet; interior and exterior paint; new appliances; kitchen or bathroom remodel; exterior landscaping and other minor improvements. An FHA approved lender will be able to answer specific questions about the Standard and Streamlined 203(K) loan program. To find out more, visit HUD’s website at www.hud.gov/offices/hsg/sfh/203k/203kslrp.cfm or call 1-800-CALLFHA. For more detail answers to your questions, visit www.southwestalliance.com. Southwest Alliance is the Management and Marketing (M&M) contractor for Texas and New Mexico. All HUD properties are listed on the Southwest Alliance website. That doesn’t mean that you submit offers to Southwest Alliance, HUD homes can only be bid through a licensed HUD registered real estate broker, and agents associated with them. The Bidding Process 1. Listing time line New Listings Are Posted on Tuesday and Friday of
Each Week
Bids are not opened on weekends or
federal holidays and will be opened and reviewed the following
business day. a. If there are no acceptable owner-occupant or NPO bids during day 1- 10, the occupancy status is no longer considered. Bids are reviewed daily, with all bids received on the same day being deemed as received simultaneous. At each daily review, the highest net bid is selected, if it meets HUD’s requirements. Bids are not opened on weekends or federal holidays, but accumulate as though received simultaneously and opened the following business day.
a. If a property remains unsold, the M&M Contractor will re-analyze the case and may reduce the price and re-list the property beginning on the following Wednesday. For five days after the property is re-listed, all bids are considered simultaneous, with owner-occupants given priority, although investors may bid. If the property remains unsold in the five-day initial re-list period, then bids are reviewed daily and the bid that offers the highest net value to HUD (regardless of occupancy) is acknowledged as the successful bid, if it meets HUD’s requirements.
HUD Homes Basic FAQ’s 1. What is a HUD home? a. A HUD home is basically a home that was financed by FHA, and insured by Fannie May federally backed mortgage insurance that has been foreclosed on, and being offered for sale by the federal government HUD. b. 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.
2. What type of home is available from HUD? a. HUD homes can be any homes that met FHA guidelines for financing that were eventually foreclosed on. There are a wide range of homes available from HUD. FHA finances single family homes up to $271, 050. b. FHA financing was and is available for manufactured homes, so there are manufactured homes available from HUD.
3. Who can buy a HUD home? a. Any qualified buyer can buy a HUD home. All U.S. Fair Housing standards apply. b. Before making an offer, prospective buyers must have a letter written on the stationary of a mortgage lender stating that they have been pre-qualified for the loan amount needed. c. Credit report performed, reviewed, and approved by the lender. d. Buyers paying cash must have proof of available funds. e. HUD 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.
4. How do I start the process of buying a HUD home? a. Start by finding a real estate agent in the area where you are interested who works for a HUD registered broker. You must use a licensed HUD registered real estate broker, and agents associated with them, to submit offers on HUD owned properties.
5. Is it possible to get a list of properties in my area? a. You may keep informed about available HUD homes by viewing the property listings at www.southwestalliance.com. Simply click on Property Listings: HUD Owned. This information is real time, so always check before you go out with your agent to see properties.
6. Does HUD make repairs on HUD-owned homes that are in poor condition? a. 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.
7. How do I make an offer to purchase? What happens after I place a bid? a. Your HUD-registered real estate agent or broker must place an offer in the form of an electronic bid on your behalf. If your 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 be the acknowledged bid listed in "Bid Results," allowing your agent or broker 48 hours to deliver a complete contract package to the appropriate Regional Office. The complete and signed Sales Contract package with all addenda, a copy of the loan pre-qualification letter, and your earnest money check. Only when a complete and correct contract package is submitted and received 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.
8. Can I buy a HUD home as an investment property? a. Yes, but owner-occupant purchasers are given priority for an initial period of time that the house is on the market. (First 10 days) These 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.
9. As an owner-occupant, can my agent bid for me on more than one house at a time? a. Yes. If you are the highest bidder on multiple houses, the M&M Contractor will choose the one on which you will be acknowledged as the successful bidder. You will not be able to select which house so make sure that any home that you submit a bid on is one that you are prepared to close on!
10. How will I know if the bid I submitted is acknowledged as the highest? a. Check on the web site in the "Search Offer Results" section the morning after the bid deadline to see if yours is the acknowledged bid. PLEASE NOTE: Having your bid acknowledged does not mean you have "bought" the house nor that it is "sold." The M&M Contractor must receive your complete and correct contract package, review it for accuracy and sign it on behalf of HUD as the seller and only then it is considered "contract pending." When you "win" the bid, all that signifies is that you have the right to submit a contract package within 48 hours. Bids are subject to cancellation until the Sales Contract is signed because all real estate transactions must be conducted in writing, something that cannot occur until your contract package is checked and accepted, as indicated by the seller's signature on the documents. If your contract package does not come in on time, or is found to be incomplete or inaccurate, the bid acknowledgement may be cancelled and the next highest bidder will be given an opportunity to submit a contract package or the property may be placed back on the Internet for another round of bidding. Please see the Disclaimers section at www.southwestalliance.com for more information.
11. What kinds of loans are available to purchase HUD homes? a. HUD is not a lender. The following are acceptable financing instruments for purchasing HUD houses: Federal Housing Administration (FHA) loans, Veterans Administration (VA) loans (subject to certain restrictions), Conventional loans and cash.
12. Will HUD pay for any closing costs on behalf of the purchaser? a. The ceiling on costs is 3% of the sales price in most states. Certain fees and expenses are automatically paid by HUD and do not have to be included in the total amount filled in on Item 5, such as an FHA appraisal and termite inspection. The Closing Agent and Listing Broker for your area should be available to assist your agent.
13. Deadlines MUST be met a. When purchasing a HUD home, you should submit your best offer during the bidding period. In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid or contract will be cancelled and the home returned to the market. Once your bid is acknowledged as the highest net to HUD, your agent must send in a correct contract within 48 hours or the bid will be cancelled. Generally, closing must take place within 60 days, "cash" deals typically close in 30 days.
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