There are many advantages to buying HUD Homes. There are also numerous incentives to Owner/Occupant buyers who purchase a HUD Home. Please contact us today for additonal information about purchasing a HUD Home.
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What is a HUD Home?
Who can buy a HUD home?
How can I buy a HUD home?
What is Owner Occupant Period?
How do I get access to see the property?
Can I submit more than one bid for different properties?
How can I cancel my Bid?
What is FHA financing?
How is the repair escrow amount determined?
How do I determine the mortgage amount when there is a repair escrow?
Will HUD pay for any closing costs?
What Incentives are Available for HUD Homes?
Where can I find additional information on HUD?
What is a HUD Home?
A HUD Home is when someone with a U.S. Department of Housing and Urban Development (HUD) insured mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. HUD then sells the home at market value through a Marketing & Management Contractor such as PEMCO.
Who can buy a HUD home?
Anyone who can qualify for a mortgage or who can pay cash may buy a HUD home. Owner occupants must live in the house as their primary residence for at least one year and may not purchase another HUD home as an Owner Occupant for two years. Buyers must use a broker or agent who is registered with HUD to place a bid on a property.
How can I buy a HUD home?
Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and considered to be received simultaneously, and, basically, the highest acceptable net bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day. The results from the review of all accepted bids are posted on our website. It is the responsibility of the real estate agent to check our website for accepted bid information and ensure that all the required forms are properly filled out and sent to us within two business days of acceptance.
What is Owner Occupant Period?
When a HUD property is first listed for sale to the general public, bids can be submitted by all potential purchasers, however, it is available to Owner Occupant Purchasers "only" during the initial priority period as specified below. All bids placed by Owner Occupants that are submitted during this priority period are considered to have been received as though they were received simultaneously. If there are no acceptable owner-occupant bids on the last day of the priority period, then bidding becomes available to all purchasers on a daily basis, with no priority given to owner/occupant bids.
GEORGIA - 12-day Owner Occupant Priority Period
During the first 12 days a HUD property is listed to the general public, it is available to Owner Occupant Purchasers only. All bids placed by owner occupants that are submitted from day 1 through day 12 are opened on the 13th day and are considered as though they were received simultaneously. If there are no acceptable owner-occupant bids on the 13th day, then bidding becomes available to all purchasers on a daily basis, with no priority given to owner/occupant bids.
New listings for the owner occupant priority period take place on Wednesday of each week with the first bid download scheduled 13 days later; (the 2nd Monday morning following the Wednesday listing.). Investors are allowed to submit their bids during the 12 day owner occupant priority period; but investor bids will not be considered if there is an acceptable owner occupant bid. If there are no acceptable owner occupant bids, investor bids will be considered and may be awarded on the 13th day; (the 2nd Monday morning following the Wednesday listing).
How do I get access to see the property?
Only licensed agents are abke to access and show you the property. Please contact us if you are interested in viewing a HUD proeperty.
Can I submit more than one bid for different properties?
If an Owner Occupant submits multiple bids for different properties PEMCO will select and award the bid that has the highest acceptable Net to HUD for that property.
How can I cancel my Bid?
If you are awarded a property either by Lottery or the General List, and you cannot complete the transaction, you will need to submit the Electronic Bid Cancellation form printed on your Broker's letterhead. The cancellation form can be found in the forms section of this website.
What is FHA financing?
There are three main types of FHA Financing. More information may be obtained from any mortgage company familiar with FHA Guidelines for the various programs.
(1) 203(b) Regular FHA Loan - Listed as "IN"
• If the Property does not have any mandatory repairs FHA will insure the Loan hence the classification of "IN"
(2) 203((b) - Repair Escrow - Listed as "IE"
• When a property has less than $5000 in repairs to bring it up to Minimum Property Standards, FHA will insure the loan provided the repairs are completed by the Buyer or the Buyer's agent within 90 days from the date of Closing.
• It is a cost to the Buyer that the Buyer can finance and add the amount to the mortgage.
• The Lender monitors and keeps the funds in an escrow account for disbursement on completion of repairs to the Lender's satisfaction.
(3) 203(k) - Rehab Loan - Listed as "203K "
• When the property has more than $5000 in Minimum Property Standards repairs to be done.
• The Lender must obtain an Inspection report from an approved 203(k) consultant and a new appraisal.
How is the repair escrow amount determined?
The FHA appraiser lists the estimated cost of repairs needed to bring the property up to minimum FHA standards. This amount is then multiplied by 110% and this amount is listed as the repair escrow amount. Example: if repairs total 1,000.00 x 110% = 1,100.00. The Repair Escrow amount will be listed at $1,100.00.
How do I determine the mortgage amount when there is a repair escrow?
The DE Underwriter will determine the final 203(b) mortgage amount. The DE Underwriter will take into account the repair escrow amount to determine the FHA loan amount. The DE underwriter will determine this amount. Regardless of whether or not a repair escrow will be used in the purchase of a home, the lines on the Sales Contract that request the down payment amount and the secured mortgage amount should be filled in "TBD" (To Be Determined). The line associated with the length of the loan should also be filled in TBD. Please remember that the repair escrow amount needs to be filled in only if the buyer is using 203(b) repair escrow financing.
Will HUD pay for any closing costs?
HUD will allow to be deducted from its proceeds, purchaser financing and closing costs that are considered to be reasonable and customary in the jurisdiction where the property is located. In no event may these costs exceed 3% of the property's gross purchase price.
What Incentives are Available for HUD Homes?
HUD offers several incentives to Owner/Occupant buyers.
- $100 Down Payment with FHA Financing
- $1000 Sales Allowance paid to Owner/Occupant buyers who go under contract (received and executed) on a HUD property within its first 30 days of being on the market
- Good Neighbor Next Door - Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence. HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this "silent second" provided that you fulfill the three-year occupancy requirement.
Where can I find additional information on HUD?
