Expert: Matt Heisler - 3/19/2008

Question
QUESTION: Hi, I have recently looked at a condo that is a HUD home in Massachusetts and I was wondering what the guidelines are for buying it?  What do I need in order to qualify for a HUD home?  And in the future if I wanted to sell it, are there stipulations that would prevent me from selling it and making a profit on it because it was purchased as a HUD home?  Is there a certain period of time I have to wait before selling it?  Thanks

ANSWER: Drew:

HUD properties are foreclosure properties that carry significant risk.  Typically, there is no home inspection negotiation, large initial deposits, and significant research for tax liens that is required.  You should contact a real estate agent, a HUD broker if you can find one, and review the property with them.  I can't emphasize enough that there is SIGNIFICANT risk in buying these homes, and it is not for the short of cash or those with little wiggle room.  You absolutely need your ducks in a row to purchase these properties (or need a good bit of luck.)  Resale, however, is not an issue.

Matt Heisler





---------- FOLLOW-UP ----------

QUESTION: The thing is, this is a building that has been renovated, completely.  Are there still big risks even if it is new?  The listing agent told me that 10% of Mass. housing is HUD. The owner is going to try and remove the HUD status in order to sell it to us, but I am not sure how difficult that is to do. Is it difficult to remove the HUD status? Would it be easier for me to just see if I can get it as a HUD.  The listing agent seems to be pushing it.  Both my agent and the listing agent no very little about HUD, and no one I ask seems to know.  This is all very confusing.  The reason I am so interested in this condo is because it is the last one in the building and I could get a very good deal on it.  But this sounds like more of a headache than a deal.

Answer
Drew:

In real estate, good deals = risk.  It's very simple.  Here's more information about HUD.

http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

HUD simply means that it's a foreclosure on a gov't loan. But only HUD agents can list HUD property, and only HUD agents can write an offer on HUD property.  It sounds like your situation is different, so somebody's got something mixed up.  The seller can't "remove" HUD status.  

OHH, I understand.  The seller needs to achieve a short-sale, with HUD.  It's not a HUD property until HUD forecloses, which hasn't happened yet. (neither agent can explain this to you?  Get a new agent.)  This should be a normal deal, but the seller needs HUD's permission to sell the loan short. (he owes more than the place is worth). Might happen, might not.  You'll have to wait it out to see.  But since the property has NOT been foreclosed yet, there is no more risk than is typical.  Get/read your condo docs, condo budget, do a title search and look for liens, and good luck!


Matt