HUD Home Selling Guide
over $150 million annually in commissions.
By now, you've probably figured out that selling real estate can be a tough way to make a living. Buyers just don't walk in your door knowing exactly what to buy. Sellers just don't always call you up to give you a great listing. There's just a lot more to selling real estate than filling out a sales contract and picking up a commission check.
But maybe there is an easier way to go. You could sell HUD Homes.
Right now HUD Homes are selling and selling well. HUD brokers have earned over $150 million annually in commissions. That's a lot of commission money, which means there's lots of opportunity for new HUD brokers. Like you.
50% of today's market.
The greatest demand for housing typically comes from first-time home buyers. These first-time home buyers fall into two categories.
First, there are buyers who know they can buy. Then there's the second, larger group: "The Dreamers."
The Dreamers have worked toward home ownership for a long time, and now with lower interest rates and other very favorable market conditions, they can buy. However, they don't yet realize they can buy.
millions of qualified prospects who
don't realize they can buy.
This larger group of first-time buyers is primarily long-time renters who don't think they'll ever be able to own a home. Their belief is so strong that, up until now, they have been unwilling to even investigate the possibility of home ownership.
To address this misperception, HUD developed a very aggressive national advertising campaign that includes everything from magazine and newspaper ads to television and radio commercials. Reaching millions and millions of people, this campaign has aroused the interest of qualified buyers and stimulated them into taking action.
The result has been phenomenal. Tens of thousands of HUD Homes have been sold to these first-time homeowners. Incredibly, even the properties typically purchased only by investors--those properties that are in need of repair--even these properties are being purchased by first-time homeowners with 203(k) rehab loans and repair escrow programs.
Through HUD's very aggressive and successful marketing program, more and more hard-working people are realizing that they, too, can have their part of the American Dream.
can pay you even more later.
It's quite likely that, as more and more people buy HUD Homes, another variable will affect the marketplace, creating even more demand for HUD Homes.
These new homeowners will begin to talk.
They'll tell relatives that they're buying a house. They'll tell neighbors and friends. And people they work with. In fact, they'll be so excited that they'll probably talk about their new home to anybody and everybody they know. And many of the people in their audience will also be just like them: people who never thought they had what it takes to own a home.
"How did you do it?" will be the first question asked by these friends, neighbors, and relatives.
The answer? "It wasn't that hard. We had this real estate agent who showed us how to do everything."
The next question could easily be, "Oh, really? Who was your agent--and what's their phone number?"
You see, when you help somebody out and show them how their dream can come true, it's quite likely that other people will soon call you, asking you to help them reach their dreams, too.
The nationwide inventory of HUD Homes is made up of houses that were previously bought through mortgages insured by the Federal Housing Administration ( FHA).
The FHA is a part of the United States Department of Housing and Urban Development ( HUD). A primary function of the FHA is to provide the mortgage insurance that will encourage lenders to make financing available and affordable for housing purchases.
As you know, in order for a mortgage loan to qualify for FHA insurance, the loan amount cannot exceed a certain figure. Mortgage loan limits are in place to ensure maximum housing affordability for those people who need the most help.
incentives will keep you selling
HUD continuously offers attractive sales programs to keep buyers buying.
For example, on FHA-insurable property, most HUD offices nationwide accept bids with down payments as low as 3%. Other programs might have even smaller down payment requirements from $500 down to only $100 down.
In addition to low down payments, some properties may come with generous moving allowances, cash rebates, or fix-up allowances for buyers. That's not all. There may even be rebates for people who are going from renting to buying. Plus, HUD may pay many closing costs on HUD Home sales, unless the buyer requests otherwise. (To enhance a bid and improve HUD's net retum, some buyers decide to pay part or all of the closing costs.)
For HUD Brokers, there are special promotions that can reward sales agents with bonuses for anything from early closings to reaching certain HUD Home sales goals. Offers vary, so contact your local HUD Field Office to find out the specific incentives for your area.
Most sales agents will agree that the ideal way to sell real estate is to list and then sell your own listings. That way you can always earn the highest possible sales commission.
Unfortunately, the majority of sales involve both a listing broker and a selling broker, which means the listing broker and selling broker split the sales commission.
Unless the selling broker sells a HUD Home.
There are no split commissions in a HUD Home sale because HUD Homes are on an open listing. HUD pays up to a 6% non-split sales commission to selling brokers.
Selling HUD Homes now can pave your way to even more sales in the future.
Here's why. The typical home buyer stays in their home for just six years. That means your first-time home buyers might wait only five or six years before deciding to buy their next house.
How does that apply to you? Ask any experienced real estate agent, and chances are you'll hear that when you do a good job helping people buy a home, once the time comes for them to sell, they'll list their houses with the same real estate agent who sold them the house to begin with. Plus, these sellers will also want you to help them buy again.
Which means you could easily have two future sales - and sales commissions - from the one HUD Home you sell now. At the same time, you'll have the opportunity to build an even greater reputation for yourself.
A greater reputation can lead to a future with even more recommendations, more leads, more listings, more sales, and more commissions.
Eventually you could find yourself in the enviable position of having a constant inventory of listings priced at fair-market values, ensuring a steady and dependable income. In good times and bad.
And it could all start when you begin selling HUD Homes. Today.
HUD is the U.S. Department of Housing and Urban Development. HUD's primary responsibility is administering programs concerned with America's housing needs, fair housing opportunities, and developing communities.
As discussed earlier, one of the programs we oversee is the FHA, which provides federal mortgage loan insurance to facilitate home ownership and the construction or improvement of housing. Occasionally, a lender is forced to foreclose on a FHA-insured single-family home, town home, or condominium when the buyer can no longer make payments. The lender can file a claim to have HUD pay the balance due on the mortgage and assume ownership of the foreclosed property. These properties then become HUD Homes.
We want to return these properties to private ownership as quickly as possible, of course, and recover as much money as possible. To accomplish this, we must rely on you to provide the vital link between HUD and prospective home buyers.
Any licensed real estate professional is eligible to sell HUD Homes, and it's easy to qualify to do so. All you that you have to do is complete two forms: SAMS Forms 1111 and 1111A SellingBroker Information and Certifications (Appendix I - one form, two-sided).
Once this bit of paperwork has been completed, you and your sales agents can show, advertise, and submit offers on HUD Homes. HUD requires the employing broker's signature on most forms and contracts. Signed forms are kept at your local HUD office so you can easily verify that your forms are current and are on file. If you need more help in your sales efforts, HUD can provide training to you and your sales staff on how to sell HUD Homes.
HUD has an active advertising program that creates demand for HUD Homes and, it is hoped, more calls to your office from potential home buyers. HUD also has programs that help make HUD Homes affordable. Accordingly, HUD has put together a comprehensive broker sales package to help you sell more HUD Homes. For example, this broker's guide is one part of the sales package. Other elements include:
- desk and window signs,
- key chains,
- and home buying information for prospective buyers. This includes a brochure explaining the ins and outs of the home-buying process and a "mini" version of this brochure you can personalize with your name and address and offer in your office in a convenient counter card display.
In some markets, listings are found in the real estate classified section of your local newspaper. HUD Homes may also appear in the Multiple Listing Service (MLS) or may arrive by fax or in the mail to registered brokers. Contact your local HUD office for the procedure used in your area.
In a few instances, local real estate companies have exclusive listing contracts with HUD to manage, maintain, and market specific properties. HUD Homes offered through exclusive listings will be identified as HUD Homes in advertising and the Multiple Listing Service.
HUD places it own "For Sale" signs on open-listed homes as soon as HUD contractors have completed their initial inspection. The appearance of this sign does not mean that the home is ready for sale, only that it is being prepared for sale. To find out whether the home is actually available for showing, consult your latest HUD listing
HUD does not allow real estate company signs on its open-listed homes. If you sell the home, however, you can place your company's "Sold" sign on the home after the buyer's contract has been accepted.
HUD Homes listed exclusively with a real estate company will be identified in the MLS as "HUD-owned." These homes will have the real estate company's "For Sale" sign on the property.
Each ad shows the HUD case number, address, in some instances the type of home, whether or not it is eligible for FHA mortgage insurance, and a brief description of the home (number of bedrooms, number of baths, etc.). Because HUD advertises many properties, mistakes in ads can occur. Never allow your prospective buyers to rely exclusively on information in HUD advertisements to make buying decisions. They should personally inspect the home with you to make sure that it meets their needs and expectations.
HUD Homes are listed by area, occasionally by price, and by category. There are normally two categories of HUD Homes: owner-occupant listings and general listings.
Generally, this is the first listing for available HUD Homes. During this period, priority is given to owner occupants and eligible housing providers for an initial period ranging from 10 to 30 days, depending on local office policy. Each offer on a property in this category must be submitted in a sealed envelope which is clearly identified as "Owner-Occupant Buyer" and contains the other required information as specified in the section titled "Make HUD an offer." Sales offers are publicly opened at the end of the competitive period according to the instructions in the section titled "What is a Public Bid Opening?"
The local HUD office may have a procedure in place, available only to owner-occupant buyers, whereby offers that are equal to or greater than the listing price are opened prior to the end of the competitive bidding period. If this procedure is in place and a full price or better offer is being submitted, the sealed envelope may contain, in addition to the other required information, the words "Full Offer" and "Owner-Occupant Buyer." Bid openings for offers in this category are conducted daily or at such other frequency as established by the HUD office. Any offer submitted during the offering period that is improperly marked, unmarked, or marked less than full offer on the sealed envelope will be opened at the end of the competitive bid period.
All property left unsold following the priority period then goes to the general listing where it is made available to the general public, which includes investors.
Following the expiration of the priority period for purchase only by owner-occupants and other housing providers, if interest has not been expressed by a government agency or nonprofit organization, the property is then offered for sale to the general public, including investors. Properties in this category fall into two separate groups:
- Properties in this group are offered on an extended basis without preference to owner-occupants. Offers on properties in this group are generally opened daily and are usually reviewed for acceptability by the following work day. Notification of acceptance generally is made within 48 hours.
- When a property in the General Listing category has either a change in price or terms, the properly will be relisted reflecting the change. Such properties will then be placed in a 10-day competitive bid period. These properties are sold without priority to owner-occupants. As with Owner-Occupant Listings, bids will be opened publicly following the bid period.
You can advertise a HUD Home on your own, supplementing the ads placed by HUD. Advertising, as you know, increases the chances of selling the home, so HUD invites and encourages you to advertise. Please follow these rules, however, when writing and placing your own HUD ads.
- Do not advertise a home before it has officially been offered for sale.
- Do not state or imply that you have an exclusive sales listing for the home.
- Do not state or imply that HUD Homes are distressed properties or foreclosures.
- Do comply with the Truth-In-Lending Act. You must provide complete details on financing if you list any specific terms such as downpayment amounts.)
- Do indicate that the house may contain lead-based paint if it was built prior to 1978.
- Do indicate the sale is an Equal Housing Opportunity (EHO) by displaying the EHO logo or by displaying these words in your ad: "HUD Homes are offered to qualified purchasers without regard to the purchaser's race, color, religion, sex, national origin, handicap, or familial status."
- Do indicate that sales are in compliance with HUD's offering, including price, priority to a particular purchaser chaser group, competitive bid period, etc.
- Do request that your ad is positioned adjacent to or as close to the HUD listing ad as possible. This will allow consumers to quickly identify you as a HUD Homes broker.
Once you have signed the Selling Broker Information and Certification (Appendix 1), you, or the sales associates you employ, can obtain a HUD lockbox key. You may bring the signed forms into the local HUD office and receive HUD keys. If you prefer, mail the signed forms to the HUD office and the keys will be mailed to you.
HUD lockbox keys are for your use only! Don't give them to prospective buyers. Please do not remove the key from the lockbox when you submit an offer. This prevents other potential home buyers from viewing the home and will delay acceptance of any offer on the home. Removal of the key may even result in re-advertisement of the home. Also, please do not remove the lockbox itself-even when your buyer's offer on the home has been accepted. This prevents HUD from inspecting the home regularly until closing.
If you would like to show a HUD Home that is listed exclusively with a local real estate company, call that company for showing instructions. A broker from the firm will be happy to assist you.
Having an open house is an excellent way to sell a HUD Home, and you can schedule one for any HUD Home available for sale. Every effort is made to accommodate brokers interested in holding an open house.
When you do schedule an open house, you are encouraged to put up open house signs. Your company's sign may be placed in front of the house during the open house hours, but be sure to remove all your signs immediately afterwards.
Please call your local HUD office when you want to make arrangements to hold an open house on a HUD Home.
When you're showing a buyer a HUD Home, be sure they fully understand these important elements of the HUD sales program:
- Buyers must make sure the home is in the condition they are willing to accept. Encourage them to inspect the home thoroughly before making an offer. HUD does not guarantee the condition of any home, FHA-insured or not, and does not verify that it complies with local code and/or zoning requirements.
- HUD makes no warranties on its homes.
- All HUD Homes are sold in As-is condition. The buyer may want to have a professional inspect the home where possible.
- To make an offer, a buyer must pay the required amount of earnest money to you. Earnest money will be returned if the offer is not accepted by HUD. But, if the offer is accepted by HUD and the buyer does not complete the purchase, the buyer will usually have to forfeit the full amount of the earnest money.
- HUD occasionally offers special sales promotion incentives and describes the requirements for those incentives in its advertising. Some promotions require that buyers make an offer for the home at the list price in order to be eligible for the incentive. This does not preclude a buyer from submitting an offer below that price; however, the incentives associated with the promotion will not be available to a successful buyer who offers less than the list price.
- Even though HUD's estimated value of the home is shown on the listing ad, the buyer may offer any price. Remember, however, that HUD will only agree to offers that provide an acceptable net return.
- The buyer is responsible for obtaining financing on the HUD Home, if necessary, to make sure the sale closes within the terms of the contract. All sales are cash to HUD.
- No repairs may be made by the buyer or the buyer's contractor unto after the closing.
- The buyer may not move any possessions into the home or live in it until after closing.
- Homes built before 1978 may contain defective paint surfaces. HUD will have those surfaces treated prior to closing.
- Be sure to let buyers know how to get their copy of HUD's comprehensive guide to home buying, too. One of the easiest ways is to have a display in your office of the "mini" guide, which contains ordering information. There's room on the back of this small brochure to print or stamp your name and address, so prospects will know who they received the information from. Call your local HUD office to obtain a supply of these selling tools.
HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing either through their own cash reserves or a mortgage lender. FHA-insured mortgage financing on certain properties is available through approved lenders, provided the buyer is credit worthy and has sufficient income to qualify.
To find out if a home is eligible for FHA insurance, consult the ad for that property. If it is, any FHA-approved lender may make an FHA-insured loan on the home to a qualified buyer.
If the ad indicates that the property is not eligible for FHA insurance, the home may simply need some repairs. Your client might ask an approved lender about the FHA 203(k) loan program. This insured loan program is available on certain single-family homes offered for sale from HUD. (It is not available for condominiums.) Using this program, a lender can provide funds for rehabilitation along with the mortgage. While a minimum of $5.000 be f repairs or improvements is required for the home to qualify, the 203(k) loan program is limited to properties that I can be readily repaired in a reasonable cost range.
You may see ads that indicate homes are eligible for the Insured Mortgage With Repair Escrow Program. Under the terms of this program, homes requiring less than $5,000 in repairs may be FHA-insured if a cash escrow account is established to complete the repairs. This program is for owner-occupants only. HUD will provide the list of required repairs to potential buyers. Only homes advertised specifically for this program are eligible.
A prequalified buyer is one who has contacted a lender and has had their credit worthiness evaluated (generally done over the phone).
A pre-approved buyer is one who based on their credit rating and/or history, has a commitment for mortgage financing from a recognized lender for a specific dollar amount sufficient to purchase the property. A pre-approved owner-occupant buyer will get a full return of their earnest money if the lender withdraws from the commitment due to the particular property being purchased.
In the case of an uninsured sale, 100% of the earnest money deposit tendered by an owner-occupant purchaser will be returned where the purchaser was pre-approved for mortgage financing in an appropriate amount by a recognized mortgage lender and, despite good faith efforts, is unable to obtain mortgage financing. Such situations most commonly will arise where, even though the purchaser has been pre-approved for a loan, the lender will not approve a morgage on the particular property being purchased.
You make offers on HUD Homes differently than you do on other types of homes. But, we've made every effort to make the offer procedure as convenient and efficient as possible for you and your buyer.
HUD sells homes through sealed offers. Use the HUD Sales Contract (Appendix 3) to make your offer. Some HUD-authorized additions to the contract may be required. Please check with your local HUD office for assistance with these additions and to ensure that such additions are permitted.
Place your completed offer in an envelope. Your envelope must have the following information marked on the outside:
- Company or Broker's name and address.
- HUD case number and address of the home.
- For homes in the offer period, please write "Sealed Offer-do not open" and the opening date for offers indicated in the HUD) ad. IF you are making a full price or higher offer on a new listing, write "full offer" on the outside of the envelope. For General Listings to the General Public, write "General Listing Offer" on the envelope.
- If you do not include this information on the envelope, or if you mark it incorrectly, the opening and review of your offer may be delayed or not be considered.
Broker's Name Place Broker's Address Stamp Here Local HUD Office Local HUD Address/Room #
HUD Case # Sealed Offer - DO NOT OPEN Type of Bid: Owner/Occupant - Hsg Provider - Govt Agcy - Investor
HUD Sales Contracts and forms?
Sales Contracts and forms for you or your sales staff may be ordered in writing or picked up in person from your local HUD office.
Except for offers on homes listed exclusively with a local real estate company, offers should be mailed or hand-delivered to your local HUD office. In some areas, HUD authorizes the use of facsimile transmission. Contact your local HUD office to determine if this policy applies in your area.
Make sure that your hand-delivered offers are date-stamped and placed in the Offer Box at your local HUD office. Offers received after the close of business will be considered to have been received on the next business day. Obviously, HUD cannot be responsible for timely delivery of offers placed in the mail.
If you are making an offer on a home that is listed exclusively with a real estate company, you must submit the offer to the listing company. They will bring the offer to HUD for review. The listing broker will also notify you of HUD's decision to accept, reject, or counter the offer.
Yes. Your buyer can make multiple offers. but be sure that they understand how their offers will be evaluated. If multiple offers are submitted by one buyer on a single property, only the offer producing the highest net return to HUD will be considered.
If a prospective owner-occupant submits offers on more than one property, the first offer that produces the greatest net return to HUD will be accepted. All other offers on other properties will be eliminated from consideration. There is one exception. If an offer is the only acceptable one on a property, that offer must be accepted and all other offers from the buyer on other properties eliminated from consideration. HUD cannot take buyer preferences into account when considering offers.
We've provided a detailed description and explanation of every item you'll find on the HUD Sales Contract in this section. Since incomplete or inaccurate Sales Contracts may not be considered by HUD, you'd want to take special care to fill out this form accurately and completely when making an offer on your buyer's behalf.
- ITEM 1.
- Type buyer(s) name and complete property address.
- ITEM 2.
- Enter name(s) and manner in which title will be taken.
- HUD will prepare the deed to transfer title according to the names that are listed under this item, so be sure to write the names exactly as your buyer(s) wishes them to appear. For example, do they want their middle initial or not? This item must be completed. Contracts are assignable only upon written consent of HUD.
- ITEM 3.
- Enter bid amount and amount of earnest money the buyer has deposited.
- Enter holder of earnest money deposit in accordance with HUD's instructions. By signing the Sales Contract, you certify that you have obtained the required amount of earnest money from the buyer in the form of a cashier's check, certified check or money order.
- ITEM 4.
- Enter when appropriate, strictly in compliance with HUD's offering.
- If HUD has offered the property with insured financing available, and the buyer is buying under such means, check the first block and complete the down payment and mortgage information. If the insured mortgage involves a repair escrow (and has been so offered by HUD), also check the second block and insert the amount of the repair escrow. Only owner-occupants are eligible for Section 203(b) mortgages with repair escrow.
- The amounts shown for "cash down payment" and "balance secured by a mortgage" is for principal only and does not include the HUD/FHA Mortgage Insurance Premium.
- If the buyer is applying for conventional or other financing not involving HUD/FHA, check the appropriate block
- ITEM 5.
- Enter the amount of financing/closing costs HUD is expected to pay.
- HUD may pay the loan origination fee, reasonable discount points, or any legitimate financing or closing costs not to exceed a certain percentage of the offer price shown in Item 3 of the Sales Contract. If the buyer is applying for a Section 203(b) mortgage with repair escrow, include the amount of lender's escrow account charge HUD is expected to pay.
- The cost of buydowns, which HUD may have arranged with certain lenders and advertised as available, must also be shown here. Amounts appearing in this item may not exceed a certain percentage of the sale price. This percentage may change from time to time, so you should check with the local HUD office if you do not know the current maximum rate. Please also see "Closing the sale" for further information.
- If the amount stated in Item 5 exceeds the actual allowable financing and/or closing costs, such excess shall not be paid by HUD and may not be used by the buyer to reduce amount(s) owing to HUD.
- ITEM 6.
- For open-listed homes, enter the dollar amount HUD is expected to pay, including any bonus offered.
- The commission will be paid by HUD upon completion of the closing. If the home was exclusively listed, the listing broker will complete Items 6 and 7.
- ITEM 7.
- Enter the net amount due HUD.
- The formula for calculating the net amount due is: purchase price less the repair escrow amount (if any), financing/closing costs, and broker's commission. The contract will be awarded on the basis of the greatest acceptable net return to HUD.
- Items 4, 5, and 6 must be stated in dollar amounts. HUD does not convert commissions, points, or other percentages into dollar amounts for you. Use of some special sales incentives may require a minimum net return in Item 7. Please review currently advertised incentives for guidelines.
- ITEM 8.
- Enter appropriate occupancy information.
- Since FHA-insured mortgages differ for owner-occupants, investors, nonprofit organizations, public housing agencies, and other government agencies, it is important that you fill out this item correctly. Misrepresenting the buyer as an owner-occupant instead of an investor may constitute fraud. If you leave this item blank the buyer will be considered to be an investor.
- ITEM 9.
- This is the buyer's commitment to close the sale by a specified date.
- HUD prefers a closing within 30-60 days of the acceptance of the offer and encourages you to close the sale as soon as possible. Find out what the closing requirements are from the local HUD office and fill in the blank with this us information. The location of the closing is usually designated by the HUD closing agent, so you can write: "Location designated by HUD's closing agent" Check with your local HUD office for specific instructions for this item. ITEM 10.
- ITEM 10.
- You must indicate if your buyer will accept being a back-up offeror.
- If HUD does not accept the offer, it may be held as a back-up in case the accepted offer should fail to close.
- ITEM 11.
- Enter this item if an addendum is to be attached to and made a part of this contract
- Addenda not previously approved by HUD may not be made part of the contract Approved addenda must be signed by and in the same style as those signing as buyer(s) in Item 2.
- HUD does not encourage the use of addenda to the Sales Contract If the home was built prior to 1978, however, you must include a Lead-Based Paint Addendum (Appendix 4). If your buyer(s) have been pre-approved for a mortgage loan, please request that they submit a letter from a lending institution indicating that the lender has made a commitment to a specific dollar amount Attach this letter to the Sales Contract.
- If you have questions about the conditions or terms you may request in an addendum, please call the HUD office.
Don't lose your sale by attaching an addendum that can't be accepted.
- If addenda are necessary, please staple or paper clip them to the contract
- ITEM 12.
- Have your buyer initial next to "Purchaser(s) Initials."
- Be sure the buyer reads and understands that failure to complete the purchase once the contract is accepted may cause HUD to retain all or a portion of the earnest money deposit. HUD requires the agency broker to sign the Sales Contract.
This should be the broker who has signed and filed the Selling Broker Information and Certification (Appendix I ).
The broker must also provide and explain to the purchaser the notice regarding use of HUD's closing agent (Appendix 6).
Don't forget to insert the full name and address of the company making the offer and the broker's name.
HUD has initiated a nationwide effort to alert homebuyers with young children to the hazards of older homes that may contain lead-based paint (LBP). If you are making an offer on a home constructed prior to 1978, you must inform the buyer that there may he lead-based paint on the premises by giving them a copy of the information notice entitled, 'Watch Out For Lead-Based Paint Poisoning!" (Appendix 5). Owner-occupant buyers must then fill out the LBP Addendum and include it with the offer. This addendum informs them of the potential existence of a lead-based paint health hazard in the home and requires buyers to agree to have all children under the age of seven tested for elevated blood level (EBL). If the testing is not completed after the offer has been accepted, or if an EBL condition is identified in the children HUD may at its option test the property and remove the hazard or cancel the contract. (Treatment of any defective paint surfaces may be completed by HUD prior to closing.) The local HUD office will help you follow these terms and procedures with your potential buyers.
A Public Bid Opening is just what its name implies-the public opening of envelopes received with offers on HUD Homes. Both brokers and prospective buyers are welcome to attend Public Bid Openings. As you read in "Owner Occupant Listings',' New Listings are open to offers for 10 days. Offers are accepted up to the date and time shown in the ad. Normally, on the following business day, HUD will open the offers either at the local HUD office or at a location announced in the newspaper listing. HUD will announce the terms of each offer made on the property. HUD will typically review all the offers and make a decision within 24 to 48 hours of the Public Bid Opening.
Offers on General Listings may be made during business hours any day. There is, generally, a daily bid opening for these. As is the case with Owner Occupant, your local HUD office will notify you if your contract has been accepted. All offers not accepted will be promptly returned.
HUD generally accepts the offer bringing the greatest net return after considering the offer price and the costs to HUD. (See Item 7 of the Sales Contract.) Offers including special incentives must comply fully with the tends of the advertised incentive program. HUD resolves the right to reject any and all offers or to withdraw any property prior to the Public Bid Opening. Be sure your offer is complete so it can be considered.
HUD may make counter offers if the offer(s) received on a property are close to a price HUD might accept and if HUD considers it likely to result in an acceptable offer. HUD is not required to counter any offer, however. Low offers may simply be rejected. If you have a low offer that is rejected and the property remains available, you may submit a higher offer to HUD if you like.
If a counter offer is being made, your local HUD office will call you with the approved minimum net counter offer and ask that, if interested, you submit a new offer. They will tell you how many other offers are also being countered on the home. Counter offers should be submitted to your local HUD office in the same manner as all other offers. The envelope must be clearly marked "Counter Offer." Counter offers should be placed in the Offer Boxes at your local HUD office the same as General Listings offers.
All counter offers, like General Listings offers, will be promptly reviewed-usually the same day they are received or no later than the following business day. It's important to note that offers made for less than HUD's acceptable counter will not be accepted. New offers received on the home during the counter period will be considered and may be accepted over counter offers. If an acceptable offer is not received within the specified period of time, the property will be returned to the market, thus terminating negotiations.
If buyer(s) want their offer to be held as a back-up offer, be sure to let HUD know that by checking the appropriate box on Item 10 of the Sales Contract. HUD may keep other acceptable offers as back-up offers on a home following a Public Bid Opening. (You may return the earnest money to your buyer if their offer is a back-up. If their offer is accepted, you must collect the earnest money again.) If the first contract fails to close, the other offers will be considered in the order of acceptance. Back-up offers are not normally accepted on General Listings, and are not considered once the home is under contract.
HUD Home sales program
is the closing.
Here's what you
After notifying you by phone that your offer has been accepted, your local HUD office will mail you a copy of the accepted contract and a contract acceptance letter. You now have the time specified in the Sales Contract to complete the details necessary for closing.
Once you're ready to close, you must notify your local HUD office or HUD's closing agent. Do not rely on the lender or some other person to set a firm closing date with HUD.
Closings are usually held at the local HUD closing agent's office. If that is impractical, you may be able to work out a more convenient location with the closing agent. However, HUD does require the presence of a HUD closing agent at all closings.
If there is a delay in closing or the closing is canceled, you must notify the local HUD office immediately.
In the event a scheduled closing cannot be met for reasons beyond the control of the buyer, HUD reserves the right to extend the time period by granting extensions. An initial 15-day extension may be provided on a case-by-case basis at no cost to owner-occupant buyers only if:
- the purchaser has made a proper and timely loan application, and
- if proof of credit approval is imminent, or
- if the delay is not due to the fault of the buyer.
Requests for extensions (Appendix 7) must be in writing. HUD's decision will also be in writing. Extensions will be granted in 15-day increments only. Requests must be accompanied by a non-refundable fee, in certified funds, for each day of extension requested.
At the time of closing, the extension fee will not be subtracted from the amount due from the buyer. If closing occurs in less time than was approved for the extension, the buyer will be credited for any unused days in the extension period. If the extension is denied, the extension fee is immediately returned to you to be given back to the buyer. If the extension is approved and the sale fails to close for any reason, the extension fee is forfeited.
If you need an extension, be sure to submit the request early enough for HUD to receive it prior to the contract expiration date. Extension requests received after thecontract has expired will not normally be considered. If the Sales Contract has expired, the home will be returned to the market (if there are no back-up offers) and the earnest money forfeited.
HUD may pay customary seller costs at closing, including delinquent water and sewer bills, pro-rated taxes, and any homeowners association dues related to HUD's ownership.
In addition, HUD may pay certain financing and closing costs up to the amount agreed to in Item 5 of the Sales Contract. These costs may be designated by the buyer and might include loan origination fees, discount points, appraisals, surveys, updated title evidence, and credit reports. The total paid by HUD will not exceed actual expenses or the amount in Item 5, whichever is less.
No portion of the Item 5 amount will be paid to the buyer if it is unused. Similarly, discount points and origination fees will be recognized and paid only to commercial lending institutions regularly engaged in the practice of making real estate loans.
HUD will only accept certified funds or their equivalent at closing. If funds for closing are being wired from a bank, they must be available in the closing agent's account prior to closing.
After the closing, you must return all HUD signs and lockboxes to the local HUD office or HUD's Real Estate Asset Manager within two days.
Please call the local HUD office as soon as you know your buyer isn't going to close so that HUD may consider back-up offers or so the home can be returned to the market. Failure to close the sale generally means your buyer may forfeit all or a portion of their earnest money. Do not return earnest money to your buyer unto authorized to do so by HUD. All monies not authorized to be returned to the buyer must be forwarded promptly to HUD.