If you are in the market for a home for yourself, your family or as an investor, Hottinger Real Estate, Inc. can offer you access to a variety of properties in urban and rural settings and a quick and convenient way of viewing homes and offering bids. If you aren’t quite ready to purchase, but want some assistance in understanding how the buying process works, submitting a bid on a home or preparing to purchase a home, please view the information below that will assist you in becoming a homeowner and enjoying the very real benefits of homeownership.
How the Government Home Buying Process Works
The following information will assist you in understanding how to purchase a government-owned home.
Anyone can buy a government-home
HUD homes can be purchased by anyone. While many of the HUD-owned homes in their inventory are affordable for low to moderate income individuals and families, there is no income restriction on purchasing these homes. However, a buyer must submit a pre-qualification letter from a lending institution or have proof that they can pay cash for the home in order for a bid to be eligible. Homes may be purchased by owner-occupants (those buyers who plan to live in the home for a minimum of one year) who have a priority bid period of 10 days. Investors may also purchase HUD-owned homes, but their bids are only accepted if an owner occupant bid does not meet the reserved price in the first 10 days a property is on the market. Reserved prices are not published for any HUD-owned property.
HUD homes are sold at market value
HUD homes are initially listed at the "as is" appraised market value. The buyer may offer any price, but HUD will only agree to offers that provide an acceptable return. The amount of the acceptable return is not available. Price reductions may take place if the home does not sell so view property listings weekly to monitor inventory and listing prices.
HUD homes are sold "As Is"
It is important to understand that HUD homes are sold in "as is" condition. This means that the condition of the home when you see it is what you will be buying. HUD, HudHomeStore.com or Hottinger Real Estate, Inc. makes no warranties, does not guarantee the condition of any home, and does not verify that it complies with any local code or zoning requirements. You must make any necessary repairs after the purchase. HUD may make, or give you an allowance for, major system or safety repairs only if you are purchasing with an FHA-insured loan. It is very important that you get a Home Inspection by a licensed professional prior to closing on the sale to fully understand the condition of the property.
Deadlines must be met
When purchasing a HUD home, you should submit your best offer during the bidding period. In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid or contract will be cancelled and the home returned to the market. Once your bid is acknowledged as the highest net to HUD, your Hottinger Real Estate, Inc. Realtor must send in a correct contract within 48 hours or the bid will be cancelled. Generally, closing must take place within 60 days, "cash" deals typically close in 30 days.
Making an Offer on a HUD Home
Offers on HUD-owned homes must be made online through a HUD-registered broker.
If you want to make an offer on a HUD home, you must bid through a HUD-registered broker which Hottinger Real Estate, Inc. has. CONTACT US for additional information on the bidding process.
How to find a HUD home
You should contact a Hottinger Real Estate, Inc. agent as instructed above. Our agents will have a list of HUD homes in their area, or you can view HUD-owned homes by clicking on the tab below:
Offers must be submitted through an online bidding process
All offers must be submitted by a HUD-registered broker through our online bidding process. Offers are made via computer through the Internet. The electronic bids are stored in the computer system and, at the appropriate time, calculations are automatically performed to determine the highest net offer to HUD.
The highest bid is acknowledged by HudHomeStore to our Broker, who is notified to send in a correct, signed sales contract within 48 hours. If the contract is not received within 48 hours or is incorrect, the home will be returned to the market or acknowledged to the next highest bidder. All acknowledged bids are subject to cancellation if prior sale, electronic error, and other conditions exist (see Disclaimers). An acknowledged bid does not constitute a sale; only a correct contract that is executed by Southwest Alliance and returned to our agents allows you to proceed to closing.
Listing Time Line
New Listings Are Posted on Friday of Each Week
Days 1 - 10 (Owner-Occupant Preference Period)
o Priority will be given to Purchasers who are owner-occupants and non-profit organizations (NPO) for the first ten (10) calendar days after a new listing is posted. (Owner-occupants must live in the house as their primary residence for at least one year and may not purchase another HUD home for two years. Anyone else is considered an investor.)
o All owner-occupant and NPO offers received during the first ten (10) day period are considered as though they were received simultaneously.
o During the next business day, after the initial ten (10) day period, the M&M Contractor will review the owner-occupant and NPO bids received electronically. From these, the bid that offers the highest net amount is acknowledged as acceptable, if it meets HUD’s requirements.
o If there are no owner/occupant or non-profit bids received that have met HUD’s requirements, Investor bids will be reviewed. From these, the bid that offers the highest net amount will be acknowledged as acceptable, if it meets HUD’s requirements.
Bids are not opened on weekends or federal holidays and will be opened and reviewed the following business day.
Days 11 – 30 (All Bidders, Daily Bid Openings)
If there are no acceptable owner-occupant or NPO bids during day 1- 10, the occupancy status is no longer considered. Bids are reviewed daily, with all bids received on the same day being deemed as received simultaneous. At each daily review, the highest net bid is selected, if it meets HUD’s requirements. Bids are not opened on weekends or federal holidays, but accumulate as though received simultaneously and opened the following business day.
Days 31 and Beyond (All Bidders, 5-day Bid, and then Daily Bid Openings)
If a property remains unsold, the M&M Contractor will re-analyze the case and may reduce the price and re-list the property beginning on the following Wednesday. For five days after the property is re-listed, all bids are considered simultaneous, with owner-occupants given priority, although investors may bid. If the property remains unsold in the five-day initial re-list period, then bids are reviewed daily and the bid that offers the highest net value to HUD (regardless of occupancy) is acknowledged as the successful bid, if it meets HUD’s requirements.
Closing on a HUD home
Closings are generally within 30-60 days and held at a closing agent office
After your contract has been received correctly, it will be signed by HudHomeStore on behalf of HUD and returned to your agent along with a contract acceptance letter. The letter will give you up to 60 days to close. Once you are ready to close, you and your Hottinger Real Estate, Inc. agent must schedule the date with the closing agent indicated on the letter, who also receives a copy of your contract. HudHomeStore does not set the closing date with you or the closing agent office; it is up to you to do this. Your broker can assist you. If you use the HUD closing agent, HUD pays their fees. You may use your own agent, but then you must pay the fees. If you use your own closing agent, they must work with the HUD agent to close the seller side of the transaction.
HUD will pay some closing and sales commission costs
HUD will pay up to 5% for the broker commission. In addition HUD will pay up to 3% of closing costs. Upon closing of a HUD-owned home, HUD will allow deduction from its proceeds for purchaser financing and closing costs considered reasonable and customary for the jurisdiction in which the property is located. The buyer must indicate on HUD Form HUD-9548 (sales contract) the total dollar amount HUD is expected to pay towards a purchaser's financing and closing costs. However, in no event may the costs exceed three percent (3%) of the property's gross purchase price.
Return of Earnest Money
When you submit a contract, you must deposit earnest money with your agent (not HudHomeStore), usually in an amount of $500 or $1,000. If you know your transaction will not close, your Hottinger Real Estate, Inc. agent must notify HudHomeStore as soon as possible so the home can be returned to the market. You may have to forfeit all or part of the earnest money if the sale does not close. If the sale is to an owner-occupant and does not close due to circumstances beyond their control, the money may be returned. Please review the earnest money policy for your area with your broker before you place a bid on a home.
Extensions of time
Extensions for time to close may be granted in 15-day increments, under certain circumstances. Extensions may be granted at no cost to owner- occupants under certain circumstances that are beyond their control, such as a delay in financing approval that is not due to the buyer. Extension fees may be charged under other circumstances. Extension requests must be submitted to the closing agent (not HUD) in writing prior to the expiration of the original closing date, and accompanied by a non-refundable fee, in certified funds, if a fee is required. Contact your closing agent for more information on this process.
Home Buying FAQs for HUD-Homes
How to Buy a HUD Home
Neighbor Next Door Sales Programs
Lead Hazard Information
Settlement Costs and Helpful Information
Fair Housing Information
Allowable Closing Costs
Other Helpful Links
HUD - http://www.hud.gov