What are HUD homes?

HUD homes are foreclosure properties on which the owners had an FHA (Federal Housing Administration) loan and stopped making their mortgage payments. Then HUD (U.S. Department of Housing and Urban Development) takes over the properties and sells them.

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Who can make bids on HUD homes?

Only HUD-registered Realtors and agents can make bids for you on a HUD home. That would be me and Five Star Real Estate! As your buyer’s agent, Brad Dunevitz will be key to navigating your HUD home purchase. I will submit your offer, notify you if it’s been accepted, submit your sale documents, schedule home inspections, liaise between you and HUD, communicate with your lender, and most importantly, communicate with you and answer your questions throughout the entire home-buying process.

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Who can buy a HUD home in the Denver area?

Any buyer who qualifies for a mortgage or has cash for a home can buy a Denver-area HUD home. 

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If you’re getting a loan, then you’ll need a pre-qualification or pre-approval letter from a lender. If you’re paying cash, then you’ll need proof of those funds in the amount of, or greater than, the price of the property. This is standard procedure for HUD and non-HUD homes.

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Are HUD foreclosed homes cheaper?

HUD homes are sold for a fair market value, which is determined in “as-is” condition by an FHA-licensed appraiser before the home is listed for sale. 

 

Translation: Although you might get one at a great price, don’t expect HUD homes to be deeply discounted.

 

What are your financing options?

You can use FHA or conventional financing to purchase a HUD home. 

 

What are the advantages of buying a HUD home in the Denver area?

● Owner-occupant buyers prioritized. If you’re planning to purchase a HUD home that will be your primary residence, there’s no need to worry about competing against cash-buying investors. Owner-occupant buyers have a 30-day window in which investors are not allowed to bid on HUD homes.​

● Closing costs might be covered. HUD might cover up to 3% of the closing costs, including recording fees and transfer taxes.

● Less haggling involved. There are no back-and-forth negotiations and no “upping the ante” to outbid other offers. Instead, HUD selects the highest-acceptable owner-occupant offer. 

 

What sticky areas should you consider when buying a HUD home?

● Homes sold in as-is condition. HUD homes are sold in the condition they’re in and might require a lot of repairs and renovations.

● Selling restrictions apply. If you purchase a HUD home, you must commit to living in it for at least one year, and you won’t be able to buy another one for at least two years.

● HUD’s limited housing supply. HUD homes are available only when someone with an FHA mortgage defaults on his or her loan. Thus, at any given time, no or only a few HUD homes will be available.

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Can you get a professional home inspection on the property?

Definitely, and I strongly recommend you do so. Since HUD properties are sold in as-is condition, HUD makes no guarantee on the condition of any property.

 

I work with highly respected and qualified home inspection companies — for general home inspections, sewer scopes, radon-gas tests, mold tests, and more — which will determine whether the condition of the home is satisfactory to you. 

 

How much earnest money does HUD require?

Not much. Earnest money is the “good faith” money that accompanies a contract or bid. HUD requires $500 for homes under $50,000 and $1,000 for homes more than $50,000 in value. The earnest money is due after HUD accepts the bid, and it must be in certified funds. HUD does not accept personal checks.

 

Can investors bid on HUD homes?

Yes! Although HUD gives preference to buyers who want to make the home their primary residence, investors can bid after the 30-day owner-occupancy period ends.

Note: If you are an investor, you will forfeit all the earnest money if the sale does not close. 

 

What is the Good Neighbor Next Door Program?

Great news! This program offers a huge incentive for full-time law enforcement officers, K–12 teachers, firefighters, and emergency medical technicians (EMTs) to buy a Denver-area HUD home. If you fall into one of these categories, then you might be eligible to pay only 50% of the list price of the home if it is in a designated revitalization area.

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To qualify, you must meet HUD’s eligibility requirements, such as agreeing to live in the home for a minimum of 36 months.

 

Step-by-Step Process to Purchasing a HUD Home with Brad Dunevitz, Five Star Real Estate

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After a property is listed:

1. Get pre-qualified or pre-approved for a loan if you plan to buy a property with a mortgage. (Brad can connect you with highly respected loan officers.) You’ll need to know in advance the price of a home you can afford to buy, including the monthly payments. Note: This process is true for HUD homes and non-HUD homes. 

2. Brad shows you the property.

3. As a HUD-registered Realtor, Brad submits an offer electronically on your behalf and for a selected price, based on our discussions. (Only HUD-registered Realtors and agents can submit a bid for you on a HUD home.)

4. After HUD reviews all bids to determine the best net offer, HUD accepts an offer and notifies Brad via email if your offer was selected.

 

After HUD accepts your offer:

6. Brad completes the sales package and sends it to you for your review.

7. You meet with Brad to sign and initial the sales package and to hand him a cashier’s check for the earnest money.

8. Brad sends the sales package and earnest money via overnight mail — within two days of HUD accepting your offer.

9. If HUD determines the sales package is complete and correct, then HUD signs it and you are officially under contract!

 

After going under contract:

10. Earnest money is delivered to the title company.

11. Brad oversees hundreds of transactional details, such as paperwork, phone calls, and emails.

12. If you are getting a loan to finance the property, then continue working with your lender to get approved and to secure the loan.

13. Hire a home inspector to inspect the entire property — roof, electrical, plumbing, HVAC, foundation, attic, crawl space, basement, and so on. You can also purchase a sewer scope and a radon-gas inspection, if necessary. (I can provide you with names of inspectors.)

14. Within 30–60 days, we close on the property.

15. You then re-key the locks after closing, and that’s it: You have just purchased a HUD home and are ready to move in!

 

Turbulence Navigator: Although I won’t promise a turbulence-free journey, my job, as your buyer’s agent, is to get you to your destination in the least time and with the least amount of aggravation. I navigate most of the behind-the-scenes turbulence, so that you don’t have to.

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