REO, Foreclosures, short sales... what are they?
REO stands for real estate-owned property:
The house failed to sell at a foreclosure auction, was claimed by the lender and is now for sale again. If that property is backed by a government mortgage, it’s a bit different. The Department of Housing and Urban Development, or HUD, pays off the remaining mortgage and then puts it up for bid. In short, a HUD REO home—also known as a HUD home—is a property without liens sold by the government, sometimes well below market value.
How to find HUD REOs
HUD advertises its homes to the general public at HUDhomestore.com, which lists available HUD REO properties throughout the country, along with the name and contact information of the asset manager in charge of the property. HUD’s site will tell you the listing period, eligible bidders and FHA financing eligibility.
Buying a HUD
REO property is different than buying a traditional home. -You’ll need to use a REALTOR® or broker who is authorized to sell a HUD property. -There’s a bidding process. At first, the property is available only to owner-occupants—investors who don’t intend to live there can’t bid at this time. If there are no acceptable bids or any offers at all during the initial bidding period, the bidding is opened up to the general public—which then includes investors. -You won’t see what other offers are made on the property. -You will need to include earnest money. -They are sold as-is, without a warranty.
Completing a HUD Purchase
If HUD accepts your bid, it will notify me with a settlement date, generally 30 to 60 days after the bid is accepted. If you’re not paying in cash, I’ll need to help you arrange financing with a mortgage lender as soon as possible.
In fact, if you’re working with me, I’m going to make sure you’ve been pre-approved! Why? If you back out or cannot pay cash during the settlement period, you’ll lose your earnest money deposit. HUD properties can be financed through a conventional loan or an FHA loan.
Special Purchase Programs
HUD offers special discounts on HUD homes to government workers and government entities. The Good Neighbor Next Door program offers some HUD properties at a 50% discount to law enforcement officers, firefighters, emergency medical technicians and public school teachers. Eligible houses for this program are in revitalization areas, which are often low-income neighborhoods that need improvement. Eligible buyers commit to living in the property for at least 36 months as their primary residence.