Real Estate Consultant · Lansing, MI · Member since 2011 · 356 posts · 306 votes
Anyone ever have this happen when you get an accepted offer, do the inspection, and then walk when something is discovered? I'm in the middle of this nonsense as I write this, which the listing broker states is targeted towards investors, and not O/O.
I walked because the 2nd bathroom in the basement is not permitted, and my guess is that it will cost a great deal to bring it to code, which completely throws off the budget, and I consider that a legit reason to walk.
All thoughts, comments, and experiences are welcome.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
12y
HUD says they consider investors to be savvy and understand if they cancel a contract due to inspection they will lose their earnest money. The earnest money forfeiture doc you signed states the only way investors get their earnest money back is if the loan falls through, they may get half back.
Rental Property Investor · Dallas, TX · Member since 2013 · 114 posts · 38 votes
12y
I have backed out, and know folks who have backed out of HUD's, and did get my EM back. Plus is sounds like your reason is a very good one. Im sorry, I cant offer much advice, I suppose that's the gov't for you...
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
If you were buying as an investor, your EM is Non refundable, regardless of Any inspection issues. This should have been clear up front. If this was as owner-occupant, you may have missed some deadline.
Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
12y
HUD says they consider investors to be savvy and understand if they cancel a contract due to inspection they will lose their earnest money. The earnest money forfeiture doc you signed states the only way investors get their earnest money back is if the loan falls through, they may get half back.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
12y
If you bought it as an investor you aren't getting your money back. If you bought as an owner occupant you may or may not get your money back at HUD's discretion. Always do all of your homework prior to sending in your contract and check on a HUD house. I think you only have 15 days as an owner occupant to come up with an inspection report noting major defects not disclosed by HUD to back out. Even at that point you only get the money back if HUD agrees with your findings. You pretty much sign your life away on their contracts.
I did get my EMD back on the only HUD deal I backed out on and that was because the house was broken into and vandalized after the contract was signed. HUD wouldn't give me a concession on the price or repair the damage so I canceled the contract and got my money back.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
@Patrick Snyder your buyer's agent should have explained to you that you would never get your EM back if your bid was accepted and you handed over the cash. If not, its a learning experience for the both of you. You might be able to push your agent in making good, but it will come out of their pocket, not HUD's pocket. First time I made a HUD bid both my agent and his broker lectured me for 15 minutes on this topic. With HUDs you do due diligence, including inspections, before making the bid.
@Kevin Brown if you were bidding as an investor and got your EM back you were lucky. If you were bidding as an OO then getting your EM back is possible. Hopefully you're not bidding as an OO if you are buying the property as an investment.
Rockford, IL · Member since 2013 · 330 posts · 62 votes
12y
Apparently, you either bid on the place sight unseen, or failed to check on the bathroom before bidding and/or before the time limit for submitting the final bid paperwork (i.e. 48 hrs.) The following rules apply:
HUD Home Store FAQs: Consumers and the General Public U.S. Department of Housing and Urban Development: August 2010
16. If I don’t like the home that I chose, can I decline the acceptance? The purchase of the property may be declined at any time, but may be subject to earnest money forfeiture.
17. What is the earnest money held for, and can I get it back? Earnest Money is a deposit towards the purchase of real estate or publicly tendered government contract made by a buyer or registered contractor to demonstrate that he/she is serious about wanting to complete the purchase.
If the seller accepts the offer, the earnest money is held in escrow by the real estate broker or by a settlement or title company until closing and is then applied to the buyer's portion of the remaining costs. If the offer is rejected, the earnest money is usually returned, since no binding contract has been entered into. If the buyer retracts the offer or does not fulfill its obligations under the contract, the earnest money is forfeited.
18. When can I complete a home inspection on the property? All purchasers are strongly encouraged to perform a walk through inspection at or near the date of your contract acceptance and, again, immediately PRIOR to closing. If a purchaser discovers a property condition that did not exist at the time of sale they must immediately notify HUD's property manager of the damage. The purchaser or agent should complete the Property Damage Report and fax it to the appropriate fax number listed on the form. Reporting the damage does not guarantee the correction of the problem that has been discovered. The lack of written documentation describing property condition at contract acceptance, however, will preclude consideration for repairs or price adjustments in the event of subsequent damage. Each case will be looked at independently and a determination will be made as to whether the damage will be repaired (or not repaired) or, under some circumstances, credits given at closing. The buyer assumes full responsibility for the property and its condition on the date of closing. HUD assumes no responsibility and will make no settlement for damages reported to HUD after the close of escrow.
SFR Investor · Dallas, TX · Member since 2011 · 604 posts · 243 votes
12y
I backed out of a hud deal as an investor because someone vandalized the house, cutting all electrical lines in the attic and some plumbing lines,,,after month HUD finally agreed to give me half of my EM back,,,I have been told i was very lucky to get half back,,,its obvious it was vandalized, which is why i probable got them to give any back
Real Estate Consultant · Lansing, MI · Member since 2011 · 356 posts · 306 votes
12y
thanks for the replies. I did inspect it prior to making the offer, but only a walkthrough to see if I would be interested. I figured that I would have the full inspection if and when it was accepted, which I did. I'll be sure to post the results, but in looking at the docs I signed, I can't find an emd forfeiture page, and neither can my agent.
Nashville, TN · Member since 2013 · 86 posts · 40 votes
12y
Your bid would have been rescinded if that addendum were not a part of the contract package.
Look at the original contract. It will state whether or not your bid was placed as an owner-occupant or investor in line 8 of the contract.
Additionally, upon approval of the contract package, your agent will receive an email with the entire package signed by HUD's authorized representative.
I have placed bids for purchasers in the past as investors who intend to live in a property because they may choose to sell the property and still be able to utilize their ability to purchase a HUD home as an owner-occupant. I am not certain by the conversation here how the agent placed your bid.
You should be entitled to a refund of your earnest money if the bid was placed on your behalf as an owner-occupant.