Failed Septic Property only being offered to Owner Occupants

3 Replies


A HUD owned property hit the market in my city offered only to owner occupants. the property was listed at 300k. I have an accepted offer of 275k.

The property has a cess pool and most likely will not pass a title v inspection. 

I know most owner occupants in the area do not have 275k cash. I know banks will not give you financing if there is no title v. 

I have a 14 day due diligence period where I am going to bring a contractor to the property to inspect the system and see what needs to be done to get the title v. 

If this turns into 30k worth of work what what can I do? 

thank you

This is a classic example of why many HUD homes are purchased by investors with cash. If you do not move forward, the property will go back on the market and if the pattern holds several more owner occupants will not be able to close for the same issue. Eventually, an investor will buy the property for cash at a price where the numbers make sense. The needed repairs will be complete and the property will be flipped to an owner occupant. I have followed this strategy for many years

Your only 2 options are to close on the property if your lender allows or terminate within the owner occupant period for inspections and receive your earnest money back. HUD will not negotiate any repairs based on your inspection. You are always free to bid again at a number that makes sense

Hi Greg,

I am really hoping it passes. This property could be worth a lot of money in two years. It just does not make much sense on the part of HUD as no one in this area has 275k in cash laying around. Everyone is borrowing money to pay for homes in this price range.

It doesn't have to make sense. That is HUD policy, owner occupants get first shot. No bureaucrat is going to stick their neck out over the sale of a house.