When looking at properties for sale listings in the Greater Phoenix Real Estate area they are identified as being a short sale, a pre-foreclosure short sale, a lender owned home ( foreclosure) or as n/a (not applicable) which means that it is a regular everyday sale by the owner. Some listings are identified as a HUD owned home and people ask us what they are.
For Americans, most would know that HUD is an acronym for a government agency that is called Housing and Urban Development. While many Canadians would recognize this acronym, it would likely still be uncertain how that agency pertains to a home listed for sale. Here’s the explanation……..
In Canada when someone is obtaining a mortgage with less than 20% down, they would be required by the lender to obtain mortgage insurance from a company like GE or from the government owned CMHC ( Canada Mortgage & Housing Corporation) The mortgage insurance premium is added to the amount financed. CMHC basically guarantees the lender that in the case of default the lender would be paid out by CMHC who in turn would take possession of the home and list it as a foreclosure for sale.
In the USA, if someone obtains a mortgage with less than 20% down they also will be required by the lenders to get mortgage insurance from FHA ( Federal Housing Administration) which is administered by HUD ( Housing & Urban Development). The same situation for a mortgage default will happen here…..HUD pays out the lender and then lists the foreclosed property for sale on the MLS. HUD owned properties for sale are always pre-inspected by home & termite inspectors and the defects found are disclosed in the Realtor remarks so that we already have a great idea what kind of maintenance would be necessary for the particular home. It is still a great idea to hire our own inspectors to check it out for ourselves and we certainly recommend it.
To submit an offer for a HUD owned home it must be done electronically online by us and then the Purchase Offer & Addendum with original signatures ( not faxed or scanned) would need to be received by the asset management company representing HUD within two business days of offer acceptance. We have to have the deposit in our hands at the time that the offer is placed unlike other transactions when we can wire the money at offer acceptance. The deposit for non-primary occupants ( vacation home or investment property) is non-refundable regardless of the home inspection results unlike all other types of transactions. To purchase as an investor or for a vacation home, the home is not eligible for a purchase until day 6 or day 31 of the listing period dependent upon the classification from HUD for each individual listing. The buyer must have a Social Security number or Employer Federal Tax ID number.
Not all brokerages are registered with this program……….fortunately Arizona Premier Realty is a participant in this program and the Lavine Team will be delighted to represent you with the purchase of a HUD or any other type of listing.
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