New to Real estate HUD home.Can you help?

Question

Hello, my name is adette. I came from an asian country and moved here in america 5 years ago and now a naturalized US citizen.I am married,26 years old,female, no kids and have owned two houses,my home and the other one is a rental.I love being in a real estate business and still new to this.Now i have a big question about HUD real estate, i am not really an experience person on buying a hud home. We found this house that we like and We have won the bid on purchasing this one property for rental and will be using a conventional loan. how do you proceed on getting a loan when the bank appraisal need to have all the utilities in the house on, and the HUD people refused to turn on the water utility?just crazy.  Any ideas? I am new to this, I have not purchased any kind of hud homes before.Is it possible that we sneak in to have the water meter hook up ask the city to do it? im not really sure about it. I dont want to get fine either from doing something that would have bad consequences. We have a real estate agent working with us but she is not that helpful either.My husband and I are confuse we dont know what to do next. pls. help.thanks for your feedback

Robert Conroy · Answer

One was a septic issue, that the AM and inspectors missed.

The other was a foundation issue.

The AM companiies I have dealt with have been professional and understanding.  No one wants to do a deal that is bad from the start, including HUD.

Greg H. · Answer

@Robert  Conroy

Can you be more specific as to what the situation was ?  Not trying to be a skeptic but we all sign an addendum stating the EM is non-refundable and since we are in different HUD regions, those of us in the Denver Rgion might be able to use the ammo

Since I am my own broker and like I said I am involved in several monthly the latter is not an issue

Robert Conroy · Answer

I make sure I identified issues during my prebid inspection that were missed by HUD, I could use as ammo. It seemed to work thank goodness for us cuz we really could have screwed the pooch.

Also, we made sure to establish good open communication during bid process with the asset mgt co.  Hint, if you need to use agents that rock with HUD props, they should have that relationship already established if there are good agent and if they doing a lot of hot deals and closing them they probably are.

Greg H. · Answer

@Robert  Conroy

Robert- Since HUDs policy is that EM is non-refundable for investors, how did you get your EM back ?

I will say in the Denver Region in over 200 transactions personally and others as a broker, the only time I have received my EM back has been title issues, damage to the property after contact acceptance or vandalism after contract acceptance

Robert Conroy · Answer

You should be able to get you deposit back, if the numbers really dont work.  Just need to communicate with the asset management company. I have done it successfully twice.  I also flipped 4 other HUD props though.

Crystal Smith · Answer

@Gracw Wachuta in addition to the advice on this thread you need to know that if you aren't occupying the property and bid as an investor, your escrow/deposit is non-refundable.  Unless there's a special circumstance.

Greg H. · Answer

@Gracw Wachuta

I saw that you have posted this in a couple of different area but I will address it here

First off, attempting to get a conventional loan on a HUD home is very difficult for the reason that you are encountering.  The appraiser is going to require that all the utilities be turn on for the appraisal which you have now discovered.  HUD guidelines only provide that the utilities can be turned on at YOUR expense during the first 15 days after contract acceptance and only for a 72 hour period.  I would suggest that your agent beg the Field Service Manager to allow an exception to get them turned on at this point.  Your agent has received the "Accepted Offer" email from the Asset Manager detailing who to contact.

Here are a few tips for anyone trying to buy a HUD home especially with a loan :

-Get an experienced agent who has worked with HUD.  HUD transactions are different than any other and frankly no matter how long he/she has been an agent....you don't know what you don't know

-Select a mortgage company that is familiar with the HUD process as the timing of the appraisal and how the loan must be funded is different from any other transactions

-Understand that you the buyer be all the costs of turning on utilities and any damage that could result from doing so.  Many municipalities will require any past due bills from the property to be paid before turning on utilities.  I have had clients pay upwards of $1500 plus the cost of inspection/appraisal to get things done.  In some cases, HUD knows of a potential leak and therefore utilities cannot be turned on therefore no appraisal is possible.  The information would be contained in the PCR(property condition report) or Property Condition Summary/Disclosure Add depending on the Asset Manager

- You only have 15 days from contract acceptance to get things done and the utilities can only be on for 72 hours

Feel free to contact me directly if I can help

Gracw W. · Answer

The report was all good and working except for the plumbing not succesful during winterization. What other option do i have in order to get the water running in the house? Considering the hud does not have the water on for appraisal?

Larry P. · Answer

was there a report showing what all they checked in the house and the results of everything they checked?

Gracw W. · Answer

Yes,the home was listed in hudhomestore.com. We had a real estate agent put a bid for us.In the disclosure it said on plumbing--winterization not successful.