The Challenge of Purchasing a HUD-Owned Home

 We recently assisted some buyers in the purchase of a HUD owned home. HUD (United States Department of Housing and Urban Development) acquires properties usually due to the foreclosure of the previous owners. They then put the property on the market for sale by new buyers. 

One of the most compelling issues of buying a HUD owned property is the property inspection. We talk about property inspections a lot on here, but they’re very unique when relating to HUD owned properties, and both the time limits and the procedures are different. 

First, rather than the ten day inspection period usually allotted in a Springfield-based contract, HUD allows the buyer up to fifteen days after receipt of the accepted contract to inspect the property. When the buyer does the inspection, they then either accept the property in it’s as-is condition, or they may choose to void the contract. HUD, in almost all cases, will do no repairs to a property, regardless of the outcome of the inspection. 

The next difference is the procedure by which the buyer goes about setting up the inspections. Many HUD properties don’t have utilities turned on, and many of them have been winterized (that is, water is completely shut off and drained from the system). So, a buyer must arrange for utilities to be turned back on in order for the inspection to take place. If the buyer is going to have the electric and/or gas set up for the inspections, the buyer must usually ask to do this at their own expense and through their own time and trouble. 

Finally, there is an even more cumbersome procedure if a property is on a well, septic, or propane gas for heating. If the buyer is going to inspect the gas services, and it has propane, the tank will usually not be on the property, so the buyer must arrange for the tank to be brought back to the property for their inspections (with permission from the property management company), and then have the propane tank picked up afterwards- they cant leave it on the property for an extended period of time or through closing. 

All of these things present different and more challenging obstacles when performing inspections on a HUD owned home, and a buyer must be prepared to go through these different procedures when considering the purchase of a HUD owned home.

For more information about this topic and the purchase of your first home, contact us on the web at springfieldfirsthome.com, or simply call or text us at 417.872.9222.