What A Buyer Needs To Know

What A Buyer Needs To Know

When Buying a HUD Home

INCENTIVE: As an owner occupant using FHA financing (only), HUD supplies the termite letter and if house built before 1978, HUD will complete lead based paint assessment no more than $4000. 
INCENTIVE: In SC, FHA offers $100 down financing on all HUD homes .  Purchaser must be approved. 
Please note this information is in addition to HUD sales contract and addendums: 
HUD properties are sold AS-IS, no repairs are made before closing. 
HUD will pay up to 3% closing costs if on offer. 
HUD will not pay deed stamps or 3rd party attorney fees. 
HUD strongly recommends your buyer to have a home inspection completed . 
When having a home inspection done, the buyer will incur any costs on de-winterizing and re-winterizing the property (currently $150.00). Also the utility fees are the buyer's expense. 
To bid as an owner occupant, you must occupy the property as primary residence for 1 year or longer and cannot have purchased a HUD home as an owner occupant in the last 2 years. 
When purchasing a HUD home with FHA financing, you can finance up to the lesser amount of the following: the list price, the contract price, or the new appraisal price.  
203B Repair escrow amounts are what the buyer needs to have in cash at closing when using a 203b loan. This repair escrow amount is in addition to the purchase price, it is a buyer cost, not a gift from HUD. 
Earnest money must be in certified funds made out to HUD for Pemco and Hometelos properties, made to the listing broker on Ofori properties, in case your bid is not accepted, make sure you are able to take check back to your bank. 
Investors will lose their earnest money for any reason failure to close. Owner Occupants may get their earnest money back if in HUD guidelines (see addendums). 
HUD recommends you complete a final walk thru before closing. 
If vandalism occurs while under contract,  HUD may allow an allotted amount to be credited to buyer at closing. Note that this amount is NOT a replacement cost; it is a set amount HUD will pay. 
HUD keys are no longer given to the buyer. The buyer will need to rekey immediately after close.

When Purchasing an REO/ Bank Owned Property:

The property is sold AS-IS.
A prequalification letter or certification of funds letter should accompany all offers. Some require a letter from a specific bank.
Earnest money deposit will be required on all accepted offers.
Set a reasonable closing date for the sooner the better.
We strongly recommend a home inspection, set inspection contingency deadline for as soon as possible.
It may take a few days to hear back from the bank on your offer, expect 1-7 business days.
Know who is representing you. The listing agent represents the seller. There are advantages to working with the listing agent, but you may wish to hire your own buyer's agent who will be representing you in the transaction.

Importance of Home Inspection, Termite Inspection, Title Insurance

Home Inspection:
A home inspection will offer a detailed analysis of the homes condition including major mechanical systems such as furnace, heating and air systems, plumbing and electrical components, roof analysis, potential threats of mold, asbestos, lead paint, code violations, and much more. The information received from a home inspection will give you the knowledge you need to determine if this is the home for you and give you the confidence of moving forward with the purchase.

Termite Inspection
Most lenders require a termite inspection in this area of the south. A termite inspection will determine if there is current or previous termite activity and if treatment or repair is necessary.

Title Insurance:
Title Insurance is a policy that protects the homeowner and the mortgage lender against problems relating to a property prior to the date of the policy. It covers title to the property, incorrect signatures on documents, forgery or fraud, defective recordation, restrictive covenants, encumbrances or judgments against the property. The cost of the insurance is minimal to peace of mind throughout your ownership of the property.