Everyone loves a bargain. When investing thousands of dollars into a Lake Havasu home, a bargain sounds particularly great. But don’t get hung up on the list price when searching out a great deal in the Havasu real estate market. HUD homes might be offered up at what looks like an amazing price. However, you should consider all angles involved in purchasing these types of properties before you submit a bid.
Pros and Cons of Buying a HUD Home
First of all, a HUD home is a property that was previously owned by someone who used an FHA loan to purchase their house. When they defaulted on their loan, ownership went to HUD. Since HUD isn’t in the business of owning real estate, they want these properties off their hands as quickly as possible. Therefore, they tend to price these homes to sell. Sometimes, that means listing them under market value. That means good news for anyone looking to become a homeowner.
Another good thing about HUD homes is that HUD prefers an owner-occupant. What is that? Someone who plans on actually living in the property for one year or longer. That pushes you ahead of an investor looking to flip a property on the cheap.
Also, with an FHA loan to buy a HUD property, you can come in at a lower downpayment than with a conventional loan. Some HUD programs also allow you to use sales allowances to pay closing or repair costs on the home.
Now, I talked about the hidden costs of buying a foreclosure home a couple of weeks ago. When buying a HUD property, you purchase it “as is”. That means that whatever may be wrong with it after you sign on the dotted line falls on your shoulders to repair. Therefore, a home inspection should be a top priority before you place your bid. That doesn’t necessarily mean that all HUD homes are rundown shacks full of problems. But it never hurts to hire a pro to look at it first.
HUD Buyer Process
Unlike traditional home sales, a HUD home goes up for auction. They provide a time limit for buyers to submit their bids. Therefore, a buyer must be prepared to make their best offer upfront. HUD looks at all offers and typically accepts the highest one. Also unlike traditional home sales, they don’t counter with a different price. However, if none of the bids they receive meet their standards (usually because they are too low), HUD may decide to extend the time period and accept more bids. Talk to your Lake Havasu real estate agent to find out what price you should submit your bid for in order to increase your chances of acceptance.