Foreclosure

• For homes in North Carolina, visit http://www.hmbireo.com which is a free site to search for HUD homes.  It is the offical listing of HUD homes and is updated every Friday with new listings
• HUD Homes are listing in the Triangle MLS and so you can find them listed in the MLS search on my website http://www.raleigh-real-estate.biz

Advantages of purchasing a HUD home?

There are many advantages to purchasing a HUD home.  First, HUD will allow the buyer to receive up to 3% in Closing Costs and your broker a commission of up to 5%.  3% is most of what typical closing costs will run with lenders fees, attorneys fees, etc. and so there’s very little money required out of pocket.  Also, all HUD homes are offered to owner occupants first before investors so you, as an owner occupant, stand a better chance to win the bidding process. 

How to View & Purchase HUD Homes

Unlike a traditional owner sale, you will need to enlist the services of a HUD registered real estate broker, such as myself.  HUD homes can only be accessed by HUD brokers and HUD brokers are the only ones who can submit your offer to HUD.  While the offer is initiated with standard paperwork and contracts, the offer is submitted electronically to the HUD system.

Tips for Purchasing HUD Homes

• Remember that all HUD homes are available for bids during a 10 day period starting on Friday and ending the Sunday of the following week at 11:59pm.
• The offer price is based on an as-is appraisal.  HUD will not accept offers less than 50% of their as-is appraisal.  Offers that exceed the appraisal price will require that the buyer bring the difference to the closing table as that amount cannot be financed.
• You do not need another appraisal.  HUD will supply your lender with a copy of the appraisal upon request.  If they perform another appraisal, the values HUD will rely on are those found in their report.
• Owner occupants get first priority.  If an offer is not accepted or received by the end of the offer period, the property is available for All Bidders.  All Bidders offers are reviewed every evening and posted the following day.
• All offers are reviewed at the same time with the highest net to HUD being the winner.  Net includes your closing costs and commissions.
• A property condition report is available for viewing on the HMBI website for every HUD listing.  This is not a home inspection and you should hire an inspector after your offer is accepted.
• If the sales price is less than $50,000, HUD requires an Earnest Money Deposit of $500.  For prices greater than $50,000, $1000 is required.  For vacant land, HUD requires that 50% of the listing price is held in escrow.  The Earnest Money is held in your real estate broker’s trust account.
• Remember that all offers are reviewed on the Monday after the 10 day period has lapsed. 
• Get approved for a mortgage through a FHA Lender BEFORE submitting an offer.  Any changes to the offer after acceptance will result in your offer being set aside.  The most common scenario is a married couple buying their first home discover that one of them has bad credit and can’t go on the loan.  Don’t let this happen to you.
• Always offer to close within 45 days even if you can close earlier.  It is much easier to close earlier than ask for an extension later.  You can ask for one free and after that HUD will charge for extensions.
• Due to numerous cases of mortgage fraud, HUD is now investigating owner-occupants.  One or more persons must be a permanent resident of that address for at least 1 year.  The penalties for falsifying your status is a $250,000 fine and/or a prision sentence of not more than 2 years.
• DO NOT MAKE ANY REPAIRS OR IMPROVEMENTS TO THE HOME BEFORE CLOSING!!!  Yes, this happens far too often and if discovered, they will be removed and discarded.

William Art Sexton
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www.raleigh-real-estate.biz