How to Buy a HUD Home in South Jersey

Finding and buying a HUD Home in South Jersey is a good investment, if you have the right information.  HUD Homes are similar to foreclosures, and there are many out there in great towns like, Mount Laurel, Marlton, Medford, Cherry Hill and Voorhees.

HUD homes first became popular many years ago when people were looking to buy homes from the governement, fix them up and live in them. Ideally, HUD likes to have the homes given to buyers that plan to live in the home, but if they are unable to sell them, they will then consider investors. Now, with foreclosures harder to get, close on, and finance, there has been a popular demand for HUD homes again.

So here is how it works….

First, you need to find a realtor that is registered and trained on how to sell HUD homes. There are only a small percentage that are, so make sure you ask, “Are you and your agency registered to sell HUD” Unlike most real estate, you HAVE to use a realtor (the is the process from HUD). The realtor can give you the list of what is out there, will submit your bid for you online, take your deposit check and fill out contracts with you. With HUD homes, you cannot avoid using a registered HUD realtor by submitting a bid yourself, since you are not dealing with a homeowner or bank. This is the one type of real estate transaction where you cannot knock on the door for the owner or call the bank direct and get the information.  The HUD list is updated every Friday and new homes in South Jersey are added to the list.  Properties located in Mount Laurel, Medford, Marlton and Cherry Hill will be very desirable and will get a lot of activity.

Placing a Bid as an Owner Occupant:

How HUD works is they offer the properties for sale in an auction format. For the first 5 days of the “auction” it is open to Owner Occupant. What this means, is a buyer who will be living in this home as a primary residence for the next 12 months will have those first 5 days to bid as a priority. Also, as an owner occupant, you are given special financing options. With FHA financing, you are able to ask for 3% of your closing costs to be paid for, and only have to put 3.5% out of pocket as a down payment. In addition, you can apply for Streamline K (loans under 35k) or 203K loans (loans over 35K) which will help you pay for any types of construction or improvements that need to be made.

Placing a Bid as an Investor:

Assuming, that there are no acceptable offers given from the Owner Occupants in the 5 days when it is first offered, HUD will then open the bidding up to Investors. The process is still the same, only you DO NOT need to sign the form where you agree to live in the home for 12 months as a primary residence. Buying the home as an investor will allow you to fix it and flip it, rent it or hold until the market turns around. You have entire flexibility.

How is a Bid Accepted

HUD will look at all the bids that come in and take the bid that has the highest NET (meaning highest amount of money offered after you look at any consessions made. Example: Buyer offers 100K, but also asks for a 3% seller consession for closing costs, would be an offer of 97K) Keep in mind, if the offers that come in are all NOT acceptable to HUD they will continue the bid process of open bidding until they get an offer they like. This holds true for any of the HUD Properties in South Jersey.

Another tip, you do not get to make multiple offers throughout the day. You get one shot, and much like an ebay auction, you do not know what the bids are until after the auction. I have seen people WIN a bid where they offered full asking price and there were no other bidders, BUT I have also seen someone LOSE a bid over a hundred dollars!

Deposits and Settlement Time Frames

The amount of money that you need to put as a deposit varies depending on the purchase price of the property. Normally, it is 1,000 to 1,500 and the check MUST be certified and given to your HUD realtor at the time of your bid. If you do not win the bid, your check is returned. Also at the time of your bid, you will sign contracts. If you decide to choose a HUD home, you must close/settle in 45 to 60 days and if you need an extention, there is a daily fee of $10-$25 dollars that needs to be paid, so make sure you plan out your timeline of moving accordingly.

For More information on HUD Homes, Visit my Personal South Jersey Real Estate Site

About Jessica JessicaHoltzman

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