|The following information is provided by the Department of Housing and Urban Development (HUD) as an introduction to the process through which HUD homes can be purchased. If you have any specific questions regarding the purchase of a HUD Home, please call the Lion Tail HUD Specialists at (678) 990-3099.|
What is a HUD Home?
A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of an action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to the public.
Who Can Buy a HUD Home?
Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner-occupants, unsold properties are available to all buyers, including investors.
How Are HUD Homes Sold?
All properties available for purchase by the public in Georgia are offered for sale at the HUDHomestore.com. Any real estate broker registered with HUD, like Lion Tail Realty, LLC may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.
HUD Homes are offered for sale at fair market value, based on a current appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial Offer Period homes remaining unsold are offered on an "Extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer.
Should I Get a Home Inspection?
HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase.
If you are interested in acquiring a HUD Home that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan.
When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. Click here for more information about FHA's 203(k) Rehabilitation Loan Program.
What About Financing?
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. Please click here for home mortgage information.
Where Can I Learn About Available HUD Properties?
Please click here to search all available HUD listings in Georgia. Any single family property acquired by HUD FHA will display a sign identifying who is managing the property before it is listed for sale. During this time the property is appraised, title issues are resolved, if necessary, and a determination is made about the property's eligibility for HUD's discount sales programs.
Does FHA Offer Any Special Discount Sales Programs?
FHA REO properties located in designated Revitalization Areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives.
Additionally, HUD's $100 Down Payment Incentive programis available for Owner-Occupants using FHA financing on qualifying HUD homes. For more information about HUD's $100 Down Payment Incentive program click here or call us at (678) 990-3099.
I Am Ready To Purchase A HUD Home!
As a potential HUD Home Buyer, you will need to submit three items to Lion Tail Realty, LLC prior to bidding on HUD Home Store:
Signed Contract for the subject HUD property;
Earnest Money in Certified Funds (Cashier's Check, Money Order, etc.), $500 if the list price is less than $50,000 or $1000 if the list price is $50,000 or more made out to HUD; and
Pre-Qualification Letter from your Lender if using a mortgage or Proof Of Funds if paying cash.
If you have any questions or concerns, please contact our office to speak to a qualified real estate professional. At first glance, the HUD Home buying process looks complicated, but our Lion Tail agents strive to make the process smooth and easy.
Lion Tail Realty, LLC
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