In Part Five of this series What happens after you place a bid on a HUD home? we learned the three possible outcomes of placing a bid on a HUD home.
In this chapter, we will assume that your bid was accepted, and that a contract was executed by all parties, and that the sale is moving forward.
The first thing that is substantially different about buying a HUD home than other kinds of foreclosures is that the utilities are not turned on. If you plan on doing an inspection on the property that you placed under contract, you need to get permission from HUD to have the utilities turned on in your name.
In doing so, you will assume all of the risks of anything that could happen as the result of having the utilities turned on, such as an overflowing sink or frozen pipes in the winter time.
You will also agree to turn the utilities off when you are through with your inspection. This becomes the sole responsibility of the buyer to take care of turning the utilities off and on.
If the inspection uncovers defects on the property, they will not be repaired. You have purchased the property as-is where-is and in the condition that it was in when you entered your bid.
In the rare event that a latent defect is discovered of a magnitude that a reasonable person would not expect, there is always the possibility that a termination and release can be negotiated.
In the meantime, you will work with your loan officer if you are getting a mortgage, who, with your agent, will work closely with the closing attorney. HUD assigns a closing agent for each transaction, and if you desire the representation of an attorney you will need hire one other than the closing agent.
When the HUD attorney has completed the title work and your mortgage company issues a "cleared to close," it it time to head to closing for settlement!
Next: Part 7, Closing on a HUD home. Previous: How to bid on a HUD home.
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This is a great series and I'm happy to have found it. I'm now eagerly looking for the last installment.
Vickie...
Thanks so much for the support ... I really appreciate it!
One more to go my friend. This has been a wonderful series Richard, I would assume that even agents can greatly benefit from reading this.
Great series! I am one of only 3 licensed HUD brokers in my area and we are seeing an uptick in requests these days.
Richard-I am enjoying this series and have bookmarked them for a future re-blog. I do a lot of HUDs in my area and heavily promote the $100 downpayment feature for owner-occupied FHA loans. I have found they require more patience and you have to be a stickler for dotting the "I"s and crossing the "T"s.
I guess it depends on the property. I give notice of when the inspection is scheduled and they turn them on, not my buyer. It never fails that we have to extend our closing date because of the title work. Buyer writes HUD a check to extend and then HUD turns around and mails it back. It was not buyers fault that we had to extend.
Good job professor (high five sound). We learn alot from each other!
Richard, I am booking marking your series, it is great. I have not experienced a HUD home, we have had so few....
And by the way, not much gets by me, I love the title you put on the photo.... gave me a good laugh!
Can't wait for the next installment!
JL...
Thanks my friend ... I have enjoyed writing the series!
Erica...
We have too many buyers and not enough properties so bidding is intense! THX.
Pam...
The $100 is great, but there may be more earnest money required. Thanks so much for the comment.
Hi Richard, I thank you for this great information about HUD homes. I know where to come for the ins and outs of a HUD transaction. Great job!
Richard,
Thanks for this series. I haven't looked up your prior posts but I will now.
I just had a client ask me today about the HUD program. Being in Canada, of course, I knew nothing about it.
But, I will by tomorrow.
Brian
There is so much liability in turning on the utilities. I have seen quite a bit of water damage lately
Hi Richard -- I've said it before, but you take the absolutely COOLEST photos! Boy...HUD homes are not for the timid and requires an agent who knows the realities of buying and selling a HUD home.
Thanks for the information. I have been learning a lot about HUD homes from reading your series.
Richard, I'm enjoying this series...you've got to be the HUD property expert in Georgia!
I will have to look back at your other posts on this. I like the HUD home process other then how strick they are on some of the paper work.