Why Buy HUD Foreclosures?

When a homeowner who used FHA financing defaults on their mortgage; the Department of Housing and Urban Development 'HUD' will take back title to the property through the foreclosure process. They then contract out the actual marketing of the property to National Home Management Solution, LLC (NHMS). The properties are marketed on a "bid" system, whereby they

set an asking price and potential buyers submit their offers through registered real estate Brokers. The listed price is determined from an appraisal that has been recently performed on the property. HUD WILL accept offers lower than the listed price and HUD will pay some of the closing cost, even for investors; up to 3% of the purchase price.

For the first ten days the property is on the market, only a person who is going to live in the property ("owner occupant") can submit an offer to purchase. During the initial 10 days it is marketed, it is on a "closed bid" system. This means that no offers will be opened until the end of the 10th day, and the offer that nets HUD the highest amount wins. Owner-occupant purchasers must sign an addendum stating that it is your intention to live in the property for at least 12 months as your primary residence and you have not purchased a HUD-owned property in the past 24 months as an owner-occupant. Falsifying this document is a felony and punishable by a fine not to exceed $250,000 and/or a prison sentence of not more than 2 years. HUD is very serious about this rule and has begun checking owner occupant statuses.

If the property does not sell to an owner occupant during those first ten days, it will then become eligible for investors. The property will continue to be on a daily bid situation from this point on, until an acceptable offer has been accepted.

Couple of the benefits of purchasing HUD properties are 1)HUD will pay up to 5% of the purchase price in closing costs and 2)a majority of the properties are priced well below local market values. HUD properties offer some incredible investment opportunities, not only for investors, but also for those looking for a place to call home.

We have the expertise and experience needed when it comes to placing your HUD bid. Remember, a vast majority of our bids WIN. If you are not working with SellState GCR to place your bid, then you are paying too much! If you or someone you know would like more information on how to buy a HUD owned property, whether as an investor or owner-occupant, please contact us.

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