There are a lot of misconceptions surrounding HUD homes and we’re going to start seeing a lot more in the Las Vegas marketplace over the next year.
The Karten Group is proud to provide the weekly HUD home list. The list is updated every Sunday morning and you can access it by clicking the link below:
Las Vegas HUD Homes for sale as of May 13, 2012 (553.4 KiB, 58 hits)
We will be happy to show you any home you’re interested in and work with you on placing your bid. All bids must be submitted through your Realtor.
How does HUD get their properties? When you purchase a property as owner-occupied, you can get an FHA mortgage. FHA allows you to put down a minimum of 3.5% of the purchase price. FHA is not a bank, it’s a government program that’s been around since 1934 and has insured over 37 million mortgages since it began. FHA’s mortgage insurance includes an upfront fee and a monthly fee, which can be financed into your loan. See your lender for specific details.
If the homeowner gets foreclosed on and loses the home, their lender submits a claim to be reimbursed for the bad loan. That reimbursement comes from the FHA. Now what happens to the home? It belongs to HUD.
HUD stands for “Housing and Urban Development” and a HUD home sounds like it’s located in a bad neighborhood, right? Yet, HUD homes are located everywhere, in every neighborhood. There are a lot of benefits to buying a HUD home, here’s an overview:
1 – Priority is given to owner occupied buyers for the first 30 days a home is listed, no investor competition (Second home buyers are not considered owner occupants)
2 – Most condos cannot be financed due to excessive investor saturation or HOA delinquency rates. However, HUD condos can be financed with an FHA loan without these worries. Great for first-time buyers.
3 – If the property needs repairs, an FHA 203(k) loan is available so you can include the repair cost in your mortgage. No additional money out of pocket needed.
4 – Offers are reviewed all at once. The offer with the highest net amount to HUD wins the bid.
5 – The appraisal is already done by HUD, so you save $400 – $450 and know the market price of the property. This is for FHA financing only. If you buy a HUD home using conventional or VA financing, you must order your own appraisal. If the appraisal comes in lower than the purchase price, you pay the difference or you can cancel or change your loan type (if available.)
6 – HUD provides a Property Inspection Report. This doesn’t replace a home inspection, but you’ll know just what’s wrong/missing before you walk through the door.
7 - HUD will pay up to 3.5% of your closing costs including your escrow fee.
Now there are limitations as well, and it’s important to know them up-front.
1 – While HUD will pay up to 3.5% of your closing costs, there are certain items you must pay for. These include: Title insurance (owner’s and lender’s) and real property transfer tax (calculated at $5.10 per $1000 of purchase price).
2 – If you bid over the asking price and you have the winning bid, you must pay the difference out of pocket, plus your down-payment.
3 – If you purchased your home through HUD as owner-occupied, you can’t buy a new HUD home for a minimum of 24 months.
4 – Homes are sold as-is. Under no circumstances will HUD make any repairs or give any credit for repairs. It doesn’t matter if you have a home inspection performed or what you find, repairs will not be addressed.
5 – If the home has a pool, it will not be filled. This is a condition of the sale and the pool must be accepted in “as is” condition.
If repairs are needed on the property, it is noted for each home.
Three are three types of financing (this doesn’t apply to cash purchases):
IN – insured (qualifies for FHA & 203(k) loans)
IE – insured escrow - has $5,000 or less in repairs needed (buyer’s responsibility.) The lender will add the amount needed for repairs to your mortgage and hold it aside so that the repairs can be completed (only by licensed contractors, not the homeowner, handymen, etc.)
UI – uninsured – has more than $5,000 in repairs or doesn’t meet guidelines for FHA financing.
For homes built before 1978, lead-based paint is a concern. If FHA financing is being obtained, HUD will perform a lead-based paint inspection and if needed, pay for stabilization and clearance, not to exceed $4,000.
If you’ve made it this far, I commend you! Here’s some bonus information. Every month a few homes become available through the “Good Neighbor Next Door” program. This allows teachers, firefighters and police the ability to purchase a HUD home for a 50% discount. There’s a bunch of conditions that apply, so if this interests you, let us know and we’ll notify you accordingly.
Follow Us On: