Buying a HUD Foreclosure

When looking for homes in the Louisville, Ky. area, you are likely to encounter homes owned by the US Department of Housing and Urban Development (known as HUD).  Many Buyers utilize financing backed by the Federal Housing Administration, or FHA, because this loan type enables a home to be purchased with a relatively low down payment (currently 3.5% of purchase price).  When these loans re foreclosed, the property is transferred to HUD for disposal.

HUD Homes are listed by specialized real estate brokerages in every area.  In most cases, they are posted on the Realtors' Multiple Listing Service as well as all of the popular real estate portals like Zillow, Trulia, Realtor.com, etc.  Any Realtor can sell these homes: however, doing so does require a certain amount of specialized knowledge.  As you might imagine, we are trained in effectively handling HUD purchases for our Buyers, and do so whenever required.

Facts about buying a home in Louisville, KY and surrounding counties from HUD:

  1. These homes can ONLY by purchased through a HUD website.  In other words, we don't "write an offer" on a HUD property -- we go into the HUD website and tell them what our Buyer is willing to pay, whether the Buyer needs closing costs assistance, etc.  They ONLY look at the net offer -- in other words, the bottom line. So, the less you ask for, the better.
  2. Only "owner occupants" who intend to live in the home may bid during the first thirty days -- no investors.
  3. During the first ten days the home is on the market, HUD will not respond to any offers.  In other words, they give the home a few days' exposure before considering offers.  On the 11th day (or the first business day after the tenth day), HUD "opens" the offers and may or may not accept one.
  4. If none of the offers from the first ten days is accepted, HUD begins to review new offers every day.  They will do this until an offer comes in that is substantial enough that HUD can: 1) Accept it, or 2) Counter it. If an offer doesn't come close to their expectations for a property, they simply ignore it.
  5. Only the winning bidder received email notification that their offer is accepted.  Nothing is sent to other bidders. The only way to know that a home is sold is when it disappears from the HUD websites.  It IS possible to see what the home sold for -- after it is sold.
  6. Once an offer is accepted from the online system, the Buyer and agent must submit a written  offer packet to HUD very quickly -- must be in HUD's hands within 48 hours.
  7. You CAN reserve the right to do inspection and walk away if the condition is more than you bargained for, but you have to ask for that right when you submit the contract.
  8. In certain cases, HUD will pay to eliminate termites and correct dangerous lead-based paint.  HUD will make NO other repairs -- these homes are sold totally "as is".
  9. Many HUD homes need repairs.  If the amount opf estimated repairs is small or $0, the home can be purchased easily.  If the home requires repairs but under a certain amount, HUD will allow FHA loans on the property with the repair amount held in escrow until repairs are completed.  If the repairs are significant, only cash buyers or those with rehabilitation financing sources can purchase the home. HUD calls the latter "uninsurable", meaning they can't guarantee the loan on the home through FHA.
  10. In many cases, HUD homes can be purchased with an FHA loan with only a $100 down payment.

So, HUD homes can be good values if you don't need an answer right away, or if the home has already been on the market for ten days.  They can also represent opportunities for savvy investors, in many cases.  In EVERY case, using a Realtor who understand the HUD purchasing process (such as the Moorhead Team) is critical to successfully purchasing a HUD home in the Louisville, Ky. market! 

Please call us if you have any questions, or complete the form below if you would like us to contact you about purchasing a home -- HUD or other!

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