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HUD and VA homes are offered for sale through the Department of Housing and Urban Development and the Veterans Administration. These single-family and multi-family homes are generally foreclosures. Some are bank foreclosures and some are repossed for unpaid taxes. The condition of these homes vary. Some homes are in fairly good condition and need few repairs. Most HUD homes are in need of repairs of the major systems in the home. Typically the plumbing has frozen and pipes have burst. A buyer must anticipate replacement of all the plumbing in the home as well as any hot water baseboard heating system if that is the heat source for the home. The condition of the wiring varies depending on the age of the home and when it was updated by a previous owner. The roof generally needs to be reshingled within the first year or so of ownership. In short HUD homes are sold in "as is" condition. It is up to the buyer to inspect the home and have any of the areas of concern reviewed by a licensed home inspector or a construction contractor. On the up side...these homes can be an incredible bargain. If you are somewhat handy with home repair these homes can be just the ticket to home ownership. When a home is first listed the price is set at full market value for the area. If an acceptable offer is not received over a period of time reductions are made to the price until it sells. There are many homes that sell for less than half the assessed value, are remodeled by the new owner and are wonderful family homes. HUD & VA homes are listed in the multi-listing service, but they do not show up as pending or under contract. It is necessary to verify that the property is not under contract through other means on the day the showing is scheduled because these programs sell their homes through a silent auction process and might be sold based on the bid results from the previous day. Even if the property is sold it will appear as available in the printouts until the property is closed and the new owner takes possession. This process can take a great deal of time...sometimes months before their status changes to closed. Because HUD and VA do not pend properties many people believe that they are in fact available because they show up as active on the market for so long. Please understand these issues if you are interested in this type of property. Ideally it is best to purchase HUD & VA homes as a cash purchase. The reasons being that it typically takes 60 - 90 days for a bank to process an uncomplicated mortgage for an existing home in move in condition. HUD & VA require that the home closes on the contract date which is typically the minimum expected time of 45 - 60 days. If there is any delay in the home closing they require that you pay additional money every 15 days until it closes to be allowed to keep the contract in force. The minimum amount for this extension is $150.00 and the amount is based on the purchase price of the home. Many people do not have cash, but they may have a parent with a home equity or know someone who could act as an investor that can either purchase the property on their behalf, or hold a first mortgage for them while they go to a bank and go through the mortgage process to repay their investor.
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