{"id":21539,"date":"2014-08-13T14:19:34","date_gmt":"2014-08-13T14:19:34","guid":{"rendered":"http:\/\/203krehabnow.com\/?p=21539"},"modified":"2014-08-13T14:19:34","modified_gmt":"2014-08-13T14:19:34","slug":"become-an-expert-at-buying-hud-owned-property-in-texas","status":"publish","type":"post","link":"https:\/\/dev203k.orbitwebx.com\/dev203k\/become-an-expert-at-buying-hud-owned-property-in-texas\/","title":{"rendered":"Become an Expert at Buying HUD Owned Property in Texas"},"content":{"rendered":"

\"HUDBuying a HUD owned property <\/a>in Texas is a slightly difference process than purchasing from an individual seller.\u00a0 These are usually great buys but there are just some things to consider<\/a>.\u00a0 Far too many times I\u2019ve seen buyers disappointed by the process simply because they were unaware of some of the, let\u2019s just call them \u201cspecial,\u201d requirements that could arise.<\/p>\n

To get started let\u2019s briefly touch on some of the differences of purchasing a HUD owned property.\u00a0 Right off the bat HUD will generally list the purchase price <\/a>at the \u201cas is\u201d<\/em> appraised value.\u00a0 Bidding over this value could mean that you will need to bring the overbid amount plus your down payment but we will talk about this in more detail shortly.<\/strong><\/p>\n

Another thing to keep in mind is that while HUD may pay<\/span> some of your closing costs <\/a>you should never assume this is being done until it\u2019s in the contract<\/a>.\u00a0 Usually when you purchase from a private seller at the very least the owner\u2019s title policy is paid on your behalf.\u00a0 This is not true of HUD.<\/strong>\u00a0 You should always check to see if they are paying anything otherwise you are stuck with the bill.<\/p>\n

Finally, surveys are never included<\/strong> but could be required at which time you will need to be prepared to pay for one.\u00a0 Why could it be required, you ask?\u00a0<\/em> Recently HUD began allowing the transaction to close at a private title company instead of a HUD authorized attorney\u2019s office.\u00a0 As a result the title company will be asked to issue the T19 endorsement <\/a>on the title work.\u00a0 Some cannot do this without a survey and a full owner\u2019s title policy.\u00a0 It\u2019s important to ask about this upfront!<\/p>\n

So why purchase from HUD\u2026well there are several GREAT reasons\u2026<\/strong><\/span><\/p>\n

HUD owned properties in Texas are a great place to turn when looking to buy a foreclosure <\/a>for several reasons. The first is they are usually very reasonably valued. The second is that HUD itself is a very motivated seller<\/strong> so once your contract is accepted the transaction does tend to move at a nice pace. The third is that some of the homes are in need of repairs but that\u2019s not a problem since under FHA we can finance the repairs<\/a> using the FHA 203k Rehab Loan<\/a>.\u00a0 Let\u2019s say you are going down the conventional path and need a renovation loan \u2013 check out the Fannie Mae HomeStyle loan.<\/a><\/p>\n

There is one aspect of the bidding process you have to know about\u2026\u2026I mentioned it earlier but let\u2019s talk in more detail\u2026<\/p>\n

Buyer Beware!<\/strong><\/span> Purchasing a HUD owned property is very different than an owner occupied property because they follow a \u201cblind\u201d bidding process. The bidding date is released by HUD, and each buyer submits their best offer-without the knowledge of any other bids. As long as HUD finds the highest offer acceptable, that offer is accepted. HUD also retains the right to refuse all offers.<\/p>\n

Sometimes when you think of your \u201cbest offer\u201d<\/em> you think about bidding over the asking price of the home<\/strong>. This can be especially true with HUD owned properties because HUD will list the home at the current appraised value which can often be a great deal!<\/p>\n

Therein lies the tricky part because if you overbid AND you are using an FHA loan for this purchase then your down payment will increase by the amount of your overbid<\/span>. Let me explain\u2026FHA is part of HUD therefore banks must use the existing appraisal<\/a>. While this does mean you will not need to purchase a new appraisal it also means that your 3.5% down payment will be based on HUD\u2019s appraised value so essentially you are paying more than the house is worth. So what happens to the amount you overbid?? It also becomes part of your down payment.<\/p>\n

Let\u2019s look at an example:<\/strong><\/p>\n