John King ~ San Antonio Real Estate ~ (210)445-2631

HUD HOMES

What is a HUD Home?

It is a home that is for sale by the Department of Housing and Urban Development, or "HUD". Basically, it's the housing arm of the U.S. Government.

Aren't these homes distressed or need a lot of work?

Not so much. These homes are in nearly neighborhood of San Antonio, in all price ranges, and a variety of conditions. This ranges from Move In Ready, to needing just some paint and carpet all the way to WOW! This is gonna take some work!

How does a home become a HUD Home?

The previous home owner had an FHA type loan, which is backed by the government. Once the bank foreclosed on it, it sold the home to the government to recoup it's investment, and now the government has the home up for sale.

Who can buy a HUD home?

Anyone, though preference is given to owner occupants over investors.

How can I buy a HUD Home?

To purchase a HUD home, a few things are required.

•o You need a HUD approved agent that access to submit a bid on your behalf.

•o You must have either a pre-approval letter OR proof of funds for a cash purchase.

•o Earnest money check at time of bid submission. Up to $50,000, it's $500. For $50,001 and up, it's $1000. Money Order OR Cashier's Check Only.

•o A little bit of patience to find the right home, at the right price.

Is it true I can get a HUD home for $100 Down Payment?

Yes. But there is a catch.... You must make a FULL PRICE OFFER and use an FHA LOAN to purchase the property. You will have to still cover your closing costs though, and HUD may even pay a portion of these for you. But the more closing costs they pay, the less your "net bid" is. HUD will pay up to 3% of the purchase price towards your closing costs, so on a $100,000 home that would be up to $3,000 they will pay for you.

How does HUD determine the winner of the bidding process?

HUD determines the winner by calculating their "Net Bid". They take your offer price, and subtract the agent's commission and any closing costs that you may ask for them to pay. That leaves them their bottom line net amount.

I see a lot of advertising for "Free HUD Home Lists" and such. If I use a particular broker / agent over another, do they have an advantage or "in" to help me win the bid?

All agents are created equal in the eyes of HUD. Any agent that advertises HUD homes must follow a set of rules in order to advertise them, and any approved agent may advertise a HUD home. In the bidding process, HUD only considers the net bid and whether or not you're an owner/occupant or investor. When choosing your agent, it is most important that you be able to communicate with them and feel comfortable working with them.

If you have any questions regarding HUD homes, please don't hesitate to ask!

Best regards,

John King

John King is a Texas Realtor® serving the Greater San Antonio Area since 2004. Proud Veteran of the U.S. Marine Corps and Army National Guard.

San Antonio - Leon Valley- Helotes - Grey Forest - Rio Medina - Pipe Creek - San Geronimo Castroville - Von Ormy - Somerset - Elmendorf - Lackland Air Force Base - Fort Sam Houston

Direct: (210)445-2631 - Email: JohnKingHomes@Gmail.com - Web: http://www.JohnKingHomes@gmail.com

Do I really have to get pre-approved before looking at homes?

I get this question every week. And the answer is "Yes". You've got questions about this, and I understand. You're not buying anything just yet, so why do you have to give up your information and talk to a loan officer?

The first part of this answer is that by getting pre-approved, you KNOW your buying power right upfront. There's no guessing or hoping that you can buy the home that just fell in love with only to find out its $30,000 over your budget. It's really hard to find one that measures up the one you couldn't get the first time. Trust me, been there.

The second part is that once you do find the perfect home and are ready to make an offer, a pre-approval letter is a prerequisite for most offers to even be considered. When a seller accepts your offer, they are taking their home off of the market for you, potentially missing another qualified buyer. And in today's market, that's worth something!

The third part is that you may have someone spending money in your name that you don't know about and causing you to be unable to obtain a mortgage. It's called identity theft, and it's happened to me as well. Fortunately, the person was caught and my credit able to get cleared up relatively quickly (it only took 11 months). It turned out to be an assistant in the HR department at a company I used to work for. It can happen to anyone, and your fault or not, it can really affect your ability to purchase a home.

The final part to this answer, and the one closest to my heart, is my wallet. It is the Realtor® Pay Plan. As a Realtor®, I don't receive a salary or even an "expense account" for my time or fuel until a new homeowner receives the keys to their new home.