Selling
HUD Homes
When
someone with a Federal Housing Administration (FHA) insured
mortgage can't meet the payments, the lender forecloses on
the home; FHA pays the lender what is owed; and then the United
States Department of Housing and Urban Development (HUD) takes
ownership of the home. Then HUD sells it at market value as
quickly as possible. Michaelson, Connor & Boul Inc. (MCB)
is a Marketing and Management contractor for HUD 1 to 4 unit
residential properties. MCB maintains and sells these properties
in accordance with HUD guidelines.
HUD homes are listed on the local Multiple
Listing Service (MLS) and on the internet. Registered brokers
and agents may place bids electronically on these properties
on behalf of a purchaser. The bid with the highest net to HUD
is selected as the provisional winner subject to timely receipt
of all required documents.
Any individual who can qualify for
a mortgage or who can pay cash may purchase a HUD home. Purchasers
must use a broker or agent who is registered with HUD to place
a bid on a property. Purchasers must also have a pre-qualification
letter from a lender or proof of cash funds in the amount
of or greater than the property they are purchasing.
Any licensed real estate agent or broker
who is registered with HUD may show and submit bids on HUD
Homes. Please be sure to register with HUD PRIOR to working
with a prospective purchaser.
Important Information about HUD Homes
All HUD homes are sold strictly “AS-IS”,
this includes the responsibility of the purchaser to de-winterize
the property. HUD does not make any repairs. There are no
representations or warranties, expressed or implied, on any
HUD property. HUD does not guarantee the condition of any
property, FHA-insurable or not, nor whether it meets local
codes or zoning requirements. Brokers should advise purchasers
that there may be code and/or zoning violations on these properties
and that it is the responsibility of the purchaser to identify
these violations. Buyers are encouraged to have homes inspected
by a qualified home inspection company to satisfy themselves
as to the condition of the property at the time of sale.
HUD
will pay up to a maximum of 3% of the purchase price, (Line
3 of sales contract), towards allowable purchaser closing
costs, not to exceed actual costs incurred. Any monies remaining
after the allowable closing costs have been paid will not
be credited to the purchaser(s) at sales closing. These costs
may only be used for specific items as stated on the Forfeiture
and Extension Policy. It is extreemly important that your
purchaser is made aware of what these closing costs may and
may not be used for. The following is a complete list of those
HUD allowable closing costs that may be credited towards Line
5 of the Sales
Contract.Closing costs paid by HUD if closing costs
(line 5) were entered on the bid and sales contract:
- Appraisal
Fee: For an FHA 203(k) loan that is necessary to determine
the “after rehab” value; for a new appraisal
where the appraisal expired prior to Sales Contract execution.
- Credit
Report: Up to $20
- Flood
Certification: If property is offered with FHA insurance
and is on a Flood Plain
- Home Inspection:
Includes testing for lead based paint, radon, mold, etc
- Loan Discount
Points: Up to 3% to buy down the rate, with certification
from lender
- Loan Origination
Fees: Up to 1% will be paid on Conventional/FHA loans; up
to 1.5% will be paid on FHA 203(k) loans
- Recording
fees and Transfer Charges for Mortgage: If sufficient funds
are on Line 5, fees will be paid; otherwise, these are the
purchaser’s costs.
- Survey:
If required by Lender
- Title
Insurance Coverage for Lender: If sufficient funds are on
Line 5
- Title
Insurance Coverage for Owner: If sufficient funds are on
Line 5
- Homeowner’s
Warranty: $200 - $400 depending on State; Check HUD Notice
H 2001-13
- Prepaid
and escrow items: For owner occupant purchasers only
Closing costs automatically paid
by HUD:
- Sales
Commission for Broad Listing Broker: Amount stated on Line
6B of the Sales Contract
- Proration
of property taxes and any special assessments such as HOA
fees, utility bills: Paid by HUD automatically
- Settlement
or Closing Fee: HUD will pay HUD’s closing agent;
if another Agent is used, this is the purchaser’s
cost.
- Transfer
Charges and Recording Fees: For the deed only, paid by HUD
automatically
- Condominium
or HOA Transfer Fee: If applicable
- Repair
Escrow Fee: Where applicable
- Selling
Agent and BLB Commissions - Lines 6a and 6b of Sales Contract
(HUD 9548-1/99)
HUD will pay a selling broker
commission of up to 5% of the purchase price. HUD will also
pay for a Broad Listing Broker commission of up to 1% of the
purchase price.
Owner Occupant and Investor purchasers
MUST be accompanied by a broker or agent when viewing any
HUD home listed for sale. Buyers may not enter a house without
their broker/agent for any reason prior to closing. If there
are difficulties gaining access to a property please contact
the local Broad Listing Broker. Lists of local broad listing
brokers may be found at www.mcbreo.com - click on your state
and then “Announcements”. Brokers and/or
agents must accompany any individual performing services such
as home inspections, appraisals, or certifications. Brokers
and agents may only use their keys for their own legitimate
use. Keys are not permitted to be lent to any other individuals
associated with any sales transactions.
No work is to be done to ANY
HUD property prior to the close of the transaction. An accepted
bid is NOT a transfer of ownership. Purchasers do not own
the home until it is recorded in their name. Purchasers may
not use the home for storage of personal items or occupy the
premises under any circumstances. Occupying
or working on a HUD home prior to the close will be treated
as trespassing. Failure to abide by this policy can result
in the cancellation of the sale transaction, forfeiture of
the earnest money deposit and may also involve suspension
of bidding privileges for the selling agent and brokerage
firm.
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