HUD Homes

HUD homes are are properties owned by the federal government Department of Housing and Urban Development.  These are properties that are competitively priced and generally represent a good value.  NextHome SunRaye Realty Associates are certified to sell HUD Homes.

How does HUD obtain these properties

The Federal Housing Administration or FHA is part of HUD.  FHA provides insurance to mortgage lenders to cover the lender’s losses in the event of a foreclosure.  Heres how it works.  A regular homeowner purchases a home with an FHA insured loan.  FHA loans are easier to qualify for than a conventional loan because the down payment can be as little 3.5 percent.  However, if the homeowner with the FHA loan is not able to make their monthly payment, the lender forecloses and turns to HUD to cover their loses.  In so doing, they title the home to HUD which now sells the home.

The HUD sales process begins with an appraisal to set pricing

HUD homes are appraised then priced at what is supposed to be fair market value.  The appraiser takes into consideration the location of the home and its condition.  The price of a home in need of repairs is adjusted downward to reflect the investment a new owner would have to make to improve the home to make it livable.

Before making an offer on a HUD Home, ask your NextHome SunRaye Realty associate to provide comparable sales of other homes in the neighborhood to assist you in determining what you believe is fair market value.

HUD Homes are sold AS IS

What you see is what you get.  It is extremely 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 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.  It is very important that you get a Home Inspection by a licensed professional prior to closing on the sale.

Finding a HUD Home

HUD Homes are sold at www.hudhomestore.com but you can only make offers through a HUD approved Real Estate broker such as NextHome SunRaye Realty.  You can search for HUD Homes by dropping the state link to select Florida.  Then enter the county.  If you want to narrow the search even further there are search boxes and drop downs to help you.  Once you see the property you like, contact NextHome SunRaye Realty to schedule your showing

Purchasing a HUD Home

HUD foreclosures are sold using a “sealed” bidding process.  You must use a HUD approved broker such as NextHome SunRaye Realty to submit your bid.  There’s an offer period during which sealed bids are accepted through your agent. All offers submitted are opened at the end of that period. HUD usually accepts the highest bid or the bid that brings them the highest net. If the home remains unsold after a period of time, then bids are then opened as they’re received.

The initial bid period is generally reserved for Owner Occupant purchasers

If your bid is accepted, NextHome SunRaye Realty will be notified by HUD and we will notify you.

Get a Home Inspection

Home Inspections are recommended for any home purchaser and particularly for foreclosures.

You should have a HUD foreclosure inspected your own peace of mind even before making an offer. It will help you to determine a bidding price, especially if repairs are required. It can tell you if this home is really something you want to get involved with.

Homes built before 1978 might contain lead-based paint so you might want to learn more about lead paint hazards before making an offer. Other items to consider are asbestos content, buried storage tanks, and similar environmental hazards.

Paying for a HUD Home

HUD does not provide direct financing to buyers of HUD Homes.  Buyers must obtain financing through either their own cash reserves or a mortgage lender.  If you have the necessary available cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. While HUD does not provide direct financing for the purchase of a HUD Home, it may be possible for you to qualify for an FHA-insured mortgage to finance the purchase.

Some HUD homes in designated revitalization areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments.  This is part of HUD’s Good Neighbor Next Door Sales program.  More information is available by clicking the link.

If you want to purchase a HUD Home that needs repairs, talk to your mortgage professional about an FHA 203k loan.

HUD Home Store FAQ