In “When the Going Gets Tough the Tough Buy HUD Homes – Part I,” we discussed why it’s important to work with a real estate agent when it comes to purchasing a HUD home, programs that are often available to help you save money on closing costs and why owner occupant buyers have an advantage of real estate investors.
Here are some additional things to consider when it comes to purchasing a HUD home. Purchasing a property that is a government foreclosure offers first time homebuyers with an excellent opportunity to purchase their dream home for a lot less money. However, when purchasing a government foreclosure, you’ll want to be sure to remember the importance of doing due diligence. You’ll want to take the time necessary to thoroughly investigate the home’s price to ensure you’re getting a reasonable deal. While preliminary research can be done on websites like Zillow.com, there’s other data that only real estate agents have access to. This is why working with a real estate agent is essential. Your real estate agent can provide you with a comparative market analysis that equips you with the knowledge you need to ascertain if buying a particular government foreclosed property is a good deal in the current home market. Never assume that a property is going to be an excellent buy just because it is a HUD home. When you’ve done your homework, there are fewer surprises and you have the peace of mind that comes with knowing when you’ve truly gotten a good deal.
First Time Home Buyers
Many first time homebuyers may have encountered government foreclosures that are being sold “As Is,” but aren’t fully aware of what to expect with such a property. Government foreclosures that are sold “As Is,” means the property has either suffered some damage or is in need of some repairs. The damage and repairs needed could be minor to extensive and so viewing the property and doing the homework mentioned above is imperative. There are situations where money may be offered in escrow to pay for certain repairs but not always. It’s up to the buyer to view to property, assess any damage and repairs that need to be made, and determine if the home is worth the amount of money it will cost to purchase a home plus the money it will take to repair it.
First-time homebuyers should also be mindful of government foreclosures that have been on the market for longer than four months. For example, if a home here in St. Louis was first listed on the market back in May 2013 and you first see it in August 2013, there are certain repairs that aren’t immediately visible. A small leak around a window or in the roof can cause a home to become overrun by mold both inside and outside the home’s walls. Unless you have a hypersensitive nose or allergy to mold, the only way you’d discover this is several months down the road as the problem grows worse, or by getting a thorough home inspection. Regardless of whether you think a home has mold or not, getting a home inspection is the best way to discover those surprises before you purchase the home. The deal’s not done until closing and so you still have time to change your mind depending on what the home inspector finds. A good home inspection is worth its weight in gold.
Most of the time the damage and repairs needed in many HUD homes simply require a little bit of know-how and some elbow grease. It’s this know-how and elbow grease that can save you thousands on the next purchase of your home.