Here at Weichert, Realtors – Engle & Hambright we’re experts in selling all types of property, including HUD Homes.  Here is a list of the most frequently asked questions we hear from buyers regarding these properties!  You can always call us at 717-291-1041 for help buying any bank owned property!

What is a HUD home?

A HUD home is a one- to four-unit single family residence that has been conveyed to HUD by the lender as a result of foreclosure when the buyer defaults on their FHA-insured loan.  HUD in turn sells the property at “AS IS” market value based on a recent appraisal.  HUD homes vary in price, location, and condition.  Some are in move-in ready condition and others are not.

Who can buy a HUD home?

Anyone with a valid Social Security Number or Employer Identification Number issued in the United States can purchase a HUD home.  Potential buyers must qualify for a mortgage or pay cash to buy a HUD home.  Buyers must have a pre-approval letter from a lender or proof of funds equal to or greater than the purchase price of the property.

What is an Owner Occupant?

An Owner Occupant is a buyer who is purchasing a HUD home to use as their primary residence for at least 12 months after settlement.  The buyer can’t have purchased a HUD home as an Owner Occupant or Investor in the past 24 months.

Will I still qualify as an Owner Occupant if someone who is not going to be living in the HUD home is buying it with me?

If there are any non-occupying buyers on the contract, mortgage and deed, the buyers are not eligible to bid as Owner Occupant—they must bid as Investors.  An example of non-occupying buyers would be parents who are on the contract, mortgage and deed to make owning a home possible for their son or daughter, but who won’t be living with their son or daughter in the HUD home.

Must I be a first-time buyer?

First-time buyers are welcome to purchase HUD homes, however, you do not have to be a first-time buyer to purchase a HUD home.  Buyers who currently own homes, or who have recently owned homes, are eligible to buy HUD homes.  However, a buyer who currently owns a home and who plans to purchase a HUD home as an Owner Occupant can no longer occupy his/her current home as their primary residence after closing on the HUD home.

I need to sell my current home before I can qualify to buy another home.  Can my purchase of a HUD home be contingent on the sale or settlement of my current home?

The purchase of a HUD home can not be contingent on the sale or settlement of another property.  There are no exceptions to this policy.

Can I buy a HUD home to rent or flip?

Investors are welcome to buy HUD homes to flip and re-sell or to hold as rental properties.

How do I find HUD homes?

HUD homes can be found online at www.hudhomestore.com or www.sageacq.com.  If you need assistance in finding a HUD home, please call Weichert Realtors – Engle & Hambright at (717) 291-1041 or (877) 490-8999 and one of our experienced agents will be happy to help you.

How can I view a HUD home?

All buyers must be accompanied by an agent when viewing any HUD home listed for sale.  Please call Weichert Realtors – Engle & Hambright at (717) 291-1041 or (877) 490-8999 and one of our experienced agents will be happy to make arrangements for you to view HUD homes.

Can I finance my purchase of a HUD home?

You can finance your purchase of a HUD home.  However, depending on condition, not all HUD homes will qualify for financing—some are cash sales only.  The condition of the HUD home will determine what types of financing can be used and will vary from HUD home to HUD home.  Many HUD homes qualify for FHA financing.  Some HUD homes qualify for conventional financing.  Because of lenders’ stricter condition requirements for VA and USDA financing, fewer HUD homes qualify for these types of loans.

Will HUD help me with my closing costs?

You can ask for seller assistance with your closing costs up to 3% of the purchase price of the home, subject to allowability by the lender.

Are there any unusual fees/costs associated with buying a HUD home?

As a government entity, HUD is exempt from paying taxes.  Accordingly, the entire 2% transfer tax levied by the State of Pennsylvania on home purchases is the responsibility of the buyer.  In addition, it is the buyer’s responsibility to pay for utility activations/de-activations, inspections, certificates of occupancy, or any other compliance fees required by local municipalities and/or utilities related to the purchase of a HUD home.

Will HUD make any repairs to the property?

All HUD homes are sold on a strictly “AS IS” basis.  HUD makes no representations or warranties concerning the condition of a HUD home and will make no repairs to the property, even if they are required by the lender as a condition of financing the HUD home purchase.

If the property is being sold “AS IS,” can I still do a home inspection?

HUD orders a Property Condition Report and Property Listing Disclosure that describe the conditions of the home at the time it was acquired by HUD.  Buyers of HUD homes are strongly encouraged to order their own home inspections to determine if there are defects beyond those listed in the Property Condition Report and Property Listing Disclosure.

How do I make a bid on a HUD home?

HUD uses an on-line, blind bidding process.  However, neither Owner Occupant nor Investor buyers can place their own bids on HUD homes.  Only agents who are registered with HUD are authorized to submit bids on HUD homes on behalf of buyers.  Please call Weichert Realtors – Engle & Hambright at (877) 490-8999 or (717) 291-1041 and one of our experienced agents will be happy to assist you with your bid.

If more than one buyer submits a bid on a HUD home, how does HUD decide which bid to accept?

Bids are accepted based on HUD’s guidelines, which include accepting the bid that yields the highest Net to HUD.  HUD’s Net is calculated by subtracting seller assistance with buyer closing costs, buyer agent commission, and listing agent commission from the purchase price.

Are bids from Owner Occupants given priority over bids from Investors?

HUD gives Owner Occupants priority consideration over Investors by allowing only Owner Occupants to bid on HUD homes for an exclusive period of time (5 to 15 days) when the HUD homes first come on the market.  After the exclusive bidding period expires, and bidding is open to both Owner Occupants and Investors, no priority consideration is given by HUD to Owner Occupant bids over Investor bids—HUD accepts the bid that yields the highest Net to HUD, regardless of buyer type.

If I’m a cash buyer who can close quickly, will that give me an advantage over a buyer who is financing his/her purchase of a HUD home?

No priority consideration is given by HUD to cash buyers over buyers who are financing their purchases of HUD homes.  HUD accepts the bid that yields the highest Net to HUD, regardless of financing type.

How long will it take to find out if my bid has been accepted?

HUD reviews bids on Monday through Friday, with the exception of Federal holidays.  Monday bids are reviewed on Tuesday morning, Tuesday bids are reviewed on Wednesday morning, etc..  Bids received on Friday, Saturday, and Sunday are reviewed on Monday morning.  Bid acceptance notifications are emailed to the buyer’s agent in the afternoon of the same day the bids were reviewed.

How quickly must I close on a HUD home after my bid is accepted?

Cash buyers have 30 days from contract ratification to close on a HUD home.  Buyers using FHA 203(b), conventional, or other financing (with the exception of FHA 203(k)) have 45 days to close.  Buyers using 203(k) financing have 60 days to close.

If I’m an Owner Occupant, how long after closing do I have to occupy the property as my permanent residence?

Owner Occupant buyers must occupy the HUD home as their permanent residence within 30 days after closing.  The “clock” on the 12-month minimum period Owner Occupant buyers must occupy the HUD home as their permanent residence begins when they move in, not when they close on the HUD home.

If I bought a HUD home as an Owner Occupant, how long do I have to wait before I can buy another HUD home?

If you purchased a HUD home as an Owner Occupant, you can’t purchase another HUD home as an Owner Occupant for at least 24 months from the time you closed on your last HUD home.

Can I own more than one HUD home at a time?

Because Owner Occupants must occupy the home as their primary residence, they can only own one HUD home at a time.  There is no limit on how many HUD homes investors can purchase and own.

If I’m buying HUD homes for investment purposes, is there a limit on how many HUD homes I can make offers on or how frequently?

There is no limit on how many HUD homes Investors can make offers on or how frequently Investors can make offers, so long as the HUD homes are not in an Owner Occupant exclusive bidding period.  It’s possible for Investors to make offers on multiple HUD homes every day of the week.

Who can I talk to if I have additional questions?

Please call Weichert Realtors – Engle & Hambright at (717) 291-1041 or (877) 490-8999 , and one of our experienced agents will be happy to answer all of your questions, guide you through the HUD home buying process, and help you to successfully purchase a HUD home.

For more information or to search available HUD properties for sale please visit www.hudhomestore.com or www.sageacq.com