We are now seeing an increasing number of real estate properties being foreclosed for failure of homeowners to comply with their monthly obligations
. This condition has opened up a dominant market for a new type of real estate property. These are the foreclosure homes and among these types of foreclosed homes include HUD properties. HUD properties refer to real estate properties that had mortgages of the FHA and were foreclosed by HUD for failure of homeowners to pay mortgage payments.
These HUD properties are then sold off through auctions at prices aimed more to disposed of such properties quickly to recover the money. The winning bidders get these HUD properties even if their highest bids are significantly lower than the quick sale price tag placed on these same HUD properties. On top of this, HUD offers 50% cutback grants on HUD properties to qualified home buyers.
A Closer Look at HUD Properties
HUD properties are real estate properties with mortgages that are covered by FHA insurance that went through foreclosure proceedings and were taken over by HUD for failure of the homeowners to pay its mortgage. These HUD properties are then offered through auction on an 'as-is' basis. Price tags of these properties are determined by their fair market value at their present condition.
The auction proceedings for HUD properties are handled by accredited management companies on behalf of HUD. The sale of these properties is done through sealed bidding and interested home buyers participate in the bidding through registered real estate brokers. An offer and contract to buy are submitted by these registered estate brokers for these HUD properties.
Anybody who has equity or who can avail of a mortgage loan can purchase HUD properties. However, HUD prioritizes home buyers who are intending to purchase HUD properties for their own occupancy. Once this sector is covered, the remaining HUD properties are fair game and will be available to all types of buyers and investors.
Essential Elements to Consider about HUD Properties
HUD properties are the multi-family or single-family mortgage properties that hardly qualify as prime real estate homes. A significant number of these properties are located in low-cost urban sites. Further, all HUD properties are sold through 'as-is' auctions and price cutbacks are determined by the degree of damage and defects of these properties that require repairs.
Home buyers will find that buying HUD properties is not the same as buying traditional properties. Owner-occupants are given first refusal in the auction, and brokers and investors participate in the bidding of the HUD properties not selected by owner-occupants within a ten-day established period.
Interested home buyers are required to pay earnest money during the auction, which is done electronically. The amount of earnest money may go as low as $500.00. Once a home buyer wins in an auction of HUD properties, the earnest money is submitted to the management company handling the auction.
Winning bidders of HUD properties are given a fix time to close the deal and submit a finalized contract. The settlement deadline usually runs to a maximum of 30 days counting from the date of contract acceptance.
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