Know the pitfalls of buying a HUD home
If you plan to be a home-flipper, investing in a Charlotte NC HUD home may seem like a good idea. But if it is your first time, and you don’t know anyone who has bought a HUD home in your area, investing in one may prove to be disastrous for you.
Buying a home, whether it is for investment or your personal use, needs time and consideration. After all, you’ll be spending hard-earned money on it.
Before you go buying that ‘for tear down’ property at the street corner, take a look first at these HUD home buying pitfalls.
1. Insufficient research and consideration. HUD homes for sale are not like the homes you see listed on the MLS. These are foreclosed residential properties financed on FHA loans. When the owner failed to pay off the mortgage, the house ends up in foreclosure, and the ownership of the property goes to the HUD ( Department of Housing and Urban Development).
If you intend to buy a HUD home foreclosure, you need to study the property so you can accurately compute how much you will spend to get the property in shape.
2. Not hiring the right agent. When you buy a home, you need the expert help of a real estate agent for the buying process to go smoothly. It’s the same thing when you buy a HUD Charlotte NC home – you need the assistance of a certified HUD agent or broker, like me, Nancy Braun. Not all agents are HUD agents. In fact, only a handful of Charlotte agents have sold HUD homes.
3. Overpriced bids. Charlotte HUD homes are priced at market value. This value comes from a HUD-approved real estate appraiser who has appraised the property against similar foreclosed properties in the area. To purchase one, your real estate agent needs to submit your proposal through a bidding process where the highest proposal wins.
If your agent is not familiar with the pricing and bidding process, you’ll likely end up submitting an overpriced proposal. An experienced agent will know the lowest bid HUD will accept for the property.
4. Failing to get an independent inspection done. One of the common mistakes I observed among many HUD home buyers is that they neglected to get their own independent inspection. Although the home has been inspected and appraised by an HUD-approved agent, it is always better to get your own inspection done on the property.
5. Not knowing which closing costs HUD will pay. Again, this pitfall comes when you fail to get the right real estate agent. A HUD-approved agent knows which closing costs HUD will pay for.
HUD pays for certain closing costs, but the closing costs for an owner-occupant or HUD investor are different. Your agent needs to know which closing costs are being paid for.
Not knowing which closing costs HUD will pay for will cost you several thousand, money you could have spent for the repair of the Charlotte home for sale.
Getting the assistance of the right agent is crucial when it comes to HUD home purchase, whether it is your first time or your tenth time. Showcase Realty is a certified HUD NLB (Neighborhood Listing Broker).
When you want to avoid HUD home-buying mistakes and earn a tidy profit from HUD investing, call us, Showcase Realty, at 704-997-3794. We would love to help you in any way we can.