HUD homes – the backstory
You may have heard that HUD homes are a good deal if you are looking into buying a home. But what is a HUD home and why is it available at such a bargain cost?
The Department of Housing and Urban Development (HUD) defines a “HUD home” as “a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage”.
HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim. In other words, it’s a property bought using an FHA-insured loan, didn’t meet the monthly mortgage, ended up in foreclosure, bought back by HUD, who is now selling it. That’s how it became a HUD home.
As to why it is available at a lower cost than other homes for sale in Charlotte, it is because the possible cost of repairs is reflected from the price.
HUD wants to sell these homes as soon as possible. To sweeten the deal, they even offer benefits and incentives for the buyers.
The HUD incentives
One such incentive is “The Good Neighbor Next Door Program” which seeks to “encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians and teachers to purchase homes in these communities…in the form of 50% discount off the list of eligible properties”.
If you happen be a community worker mentioned on the list, you are entitled to 50% off on top of the already low-priced home! Imagine the money you’ll be able to save from that!
If the foreclosed homes are not sold within six months, HUD has another special offer. The agency may sell them for $1 each to local governments to “foster housing opportunities for low to moderate income families and address specific community needs”.
How can you buy one?
For the list of available HUD real estate owned (REO) single-family properties, you can visit the HUD Home Store. This site offers the public, brokers, potential owner-occupants, state and local governments and nonprofit organizations a centralized location where they can search for HUD properties for sale.
It is also the site where registered real estate brokers and other organizations can send bids on behalf of their clients who want to purchase a HUD property.
When you’ve found a Charlotte home you like, contact a HUD-approved real estate broker who can setup a showing for you to visit the home. Unlike the process of buying regular homes, you have to place bids through your agent, and there is a time period where bids are accepted. When that bidding period is over, HUD checks all the bids and accepts the best bid where their agency can get the highest net.
HUD homes are sold as is. If the home you like requires repairs, you will be the one responsible for it. Which is why HUD encourages interested home buyers to get a home inspection before submitting an offer for the home.
Are you considering purchasing a HUD home? Call me, Nancy Braun, at (704) 997-3794.