Southwest Michigan Realtor

By Michael Delaware, REALTOR®

Buying ‘HUD’ Homes in Michigan

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HUD homes (HUD stands for ‘Housing and Urban Development) are a different type of foreclosure, but a foreclosure nonetheless. There is always strong interest in buying HUD homes in Michigan.

Buying a HUD Home can be a great deal.

I have people call me specifically to find out about only ‘HUD homes’. When I ask them why, they usually answer with the most surprising responses. ‘I have heard they are the best deals’, ‘I heard they have programs where you can take over the payments’ and ‘My uncle says he buys them all the time without a Realtor, so it is cheaper…’ All of these myths are false.

Yes, HUD Homes in Michigan are often good deals, but are they the best? No, I have found that this is not always the case. There can be great deals in HUD Homes in Michigan, but standard bank foreclosures are sometimes better. It is a complete falsehood that buying HUD Homes in Michigan or anywhere can be done by ‘taking over the payments’ and ‘without a Realtor’.

So let’s clarify a few things here. What exactly is a HUD Home? Well, in simplicity it is a foreclosure on a government loan from the Federal Housing Authority (FHA). The government is selling the home off through to recovers losses. That is the simplest description I can offer for HUD Homes in Michigan, or anywhere.

HUD Homes require certain procedures be followed when submitting an offer.

HUD contracts a local asset management company for each US State to sell off the homes, using their guidelines. The homes are listed and sold per a specific system. The asset company contracts local Realtors to list the properties, and they do so per the guidelines of HUD.

When viewing HUD Homes in Michigan, you must be accompanied by a licensed Realtor to see the home, and if you choose to write an offer, it must be done through a Realtor. Like any foreclosure purchase, there are certain requirements that must be included with any offer.

People buying HUD Homes in Michigan must provide proof of funds or proof of financing. This is either an account statement or letter from a financial institution that substantiates that you either have the cash available in full or are approved to borrow the amount you are offering.

You will also be required to present an earnest deposit. This is per the current rule $500 for under $40,000, and $1000 for anything above $40,000. Varying amounts of earnest deposits are not accepted. You must also fill out a precise purchase contract, and accompany documents, through a Realtor, and the Realtor must also sign certain documents.

The initial offer is done through the electronic bidding process online, which the Realtor enters for you. This electronic bid requires that you provide your social security number, legal name, address, and the amount of your offer. If the bid is accepted, then your Realtor is notified through email of your offers acceptance. If it is not accepted, there is no email. There is never a counter offer or negotiations with HUD. You offer is either accepted or it is not.  HUD Homes can be viewed at: www.hudhomestore.com.

If you are interested in finding out more, you can contact me through my website at: http://www.michaeldelaware.comand I would be happy to get you information on HUD homes in the area.

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