You can buy real estate properties from the government at low and discounted prices through government foreclosures. Indeed, you can only tour prospective HUD properties with the assistance of a HUD recognized real estate professional, and the agent must submit the bid for the client. Nonprofits rank below Government Entities in the bid selection process for the lottery, but above them for exclusive and extended listings.
Once your realtor sends the contract to HUD and they approve it, the process will need up to 30 days for closing on the property. HUD will not publish their guidelines for the minimum price offers they will accept. If the HUD home foreclosure is new on the market, HUD will usually accept 85% to 88% of the list price net to HUD.
HUD brokers receive new listings of HUD homes every week. For FHA-insured properties, buyers can qualify for FHA financing with only 3.5 percent down with a minimum credit score of 580. However, depending on condition, not all HUD homes will qualify for financingâ€”some are cash sales only.
HUD homes are appraised, then priced at fair market value for their location. However, when a home financed by an FHA loan goes into foreclosure, the original lender gets reimbursed by HUD for the outstanding loan balance. Purchasing a foreclosure property as an investment can be a great idea, assuming you’ve done ample research into your local market.
In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid or contract will be cancelled and the home returned to the market. Another good place to find information on foreclosed homes for sale is your state’s MLS service(s).