Newnan, GA

In Part Six of this series Taking the HUD contract through to closing. we learned about what happens between the time a HUD contract is executed and the time of settlement.

In this chapter, we will discuss the closing or settlement process.

Once the title work has been completed and the buyer's loan is approved, it's time to close on the property. All HUD properties are assigned to a law firm or title agent that is responsible for closing the government owned property.

Buyers need to be aware that the attorney or agent is representing HUD and not the purchaser. If a purchaser desires legal representation, they should engage an attorney to represent them at settlement.

At closing, buyers will acknowledge that the HUD-1 settlement statement is correct. This statement outlines all of the costs involved with the purchase of the property, and indicates which items are paid by the buyer and which are paid by the seller.

The statement also itemizes credits and debits from one party to another, such as a credit for prorated property taxes or bonuses from HUD.

The final reconciliation involves either an amount of "cash from" the buyer or in some cases in which deposits are greater than the down payment "cash to" the buyer.

In the event that a mortgage is obtained, the remainder of the closing involves signing the myriad of documents contained in the "package" from the lender. These documents are not exclusive to a HUD purchase, but are required from the lender on every kind of real estate purchase.

Some examples of documents that a buyer will sign in the state of Georgia are the promissory note, a security deed, tax documents and a waiver of judicial foreclosure. The typical package will require between 50 and 100 signatures or initials!

Please be aware that when a HUD home is purchased, no keys will be passed across the table. It is the responsibility of the purchaser to immediately have the locks changed at their expense after closing. Typically, your real estate agent will open the door in order to facilitate the changing of the hardware.

The closing agent will then ensure that the buyer is provided with a copy of every document, including the warranty deed which the attorney or closing agent will record at the county courthouse before mailing an original to the buyer.

At that time, congratulations are in order. You will have successfully purchased a HUD home, and now it is time to bathe in the "quiet enjoyment" of your very own home!

This installment concludes the series. Previous: How to bid on a HUD home.

As you drive on Hwy 29 North you will experience the beauty of several gardens along a stretch of this state highway.

Right across the street from Arbor Springs Plantation you will find the Oak Grove Plantation and Gardens. The Plantation is on the National Register of Historic Places. You will find themed gardens: the herb garden, pool garden, patience garden, perennial garden, vegetable garden and a sunken garden. www.oakgrovega.com

In our entrance, Arbor Springs Plantation planted several varieties of day lilies that were clippings from these gardens. The Arbor Springs Elementary school even has a beautiful entrance with flowers.

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.

In Part 4 of this series How to bid on a HUD home we learned how to enter a bid on a HUD property in Georgia. Now we will examine what happens after the bid is submitted:

Once you have entered a bid on a HUD home, you must wait until the offer deadline expires before you will know whether or not you have been successful and your bid has been accepted.

Usually, within a few hours of the deadline, one of three possibilities occurs:

1. No bid is accepted by HUD, and the property goes to a day-by-day bid process. When this occurs, bids may be submitted daily to HUD until such a time as one bid is accepted. This process can go on for several weeks and the property remains available to sale.
2. Another offer is accepted, and you lose the bid. This is probably, though not necessarily the end of your opportunity to purchase the property. If, as part of your bid, you elected the option of being in a back-up position, you may have a second chance if the winning bidders fail to execute their contract or close the property.
3. Your bid is "acknowledged." If your offer is accepted as the winning bid, the clock starts ticking. You agent will have two business days to deliver the original contracts signed in blue ink to the HUD contractor. Along with the contract, a copy of the earnest money check and a lender pre-approval letter must be submitted to create a valid contract.

The contract does not become official until it is signed by a representative for HUD. At the time that it is signed, it is email to your agent and the property status is changed to "under contract."

It's official, and it's time to move to the next phase of the process.

Next: Part 6, Taking the HUD contract through to closing? Previous: How to bid on a HUD home.

In Part 3 of this series How do you find a HUD home in your area that is for sale? we discovered that the best way to find a suitable HUD homes is to engage a real estate buyer's agent that is proficient in the HUD buying process.

Once you have found a HUD home that is suitable for your needs, it's time to consider making an offer. In the state of Georgia, HUD uses a blind bidding process that allows each potential buyer to enter a bid prior to a clearly defined bid deadline.

Before having your buyer's agent enter your bid, you need to do several things. First and foremost, you need to read and understand the property inspection report prepared by the HUD inspector. The inspector evaluates the condition of the property in order to establish an appraised value.

Finally, before you decide on a final bid price to offer, it is imperative that you ask yourself this question:

Is it more important to you to get the house or to get a good deal?

That's a fair question, and it is an important one. Some buyers fall in love with a house, and want to ensure a good chance of entering a successful bid. Other buyers are more intent on getting a deal on a house, and that overrides their desire for any particular property.

As long as a buyer is willing to lose the house, a low bid can be proffered. But if a buyer really wants the property, one must seriously consider the HUD appraisal price as at or near the market value.

In Georgia, a licensed real estate agent must be used to enter a bid for an owner-occupant HUD property. And remember that experience is counts.

The most valuable asset that a HUD buyer can have in the bidding process is the assistance of an experienced real estate professional that has successfully entered winning bids on behalf of their clients!

Next: Part 5, What happens after your HUD bid is accepted? Previous: How do you find a HUD home in your area that is for sale?