Buying a Richmond VA HUD home can be a great deal if you understand the process and can take the emotion out of buying a Richmond VA home for sale. So, let’s go over the basics.
What is a HUD home? A HUD home is one in which the previous owners had an FHA backed mortgage, defaulted, and ended up in foreclosure. The government pays off the lending institution and has essentially taken back their property.
How does buying a Richmond VA HUD home work? When you have found a HUD house that you would like to make your home, there is a bidding process. Owner Occupants and a few other categories of buyers have priority bidding status on these homes. There will be a set price, determined by a home appraisal done by HUD, and you must use a registered HUD real estate agent to bid on your behalf. You can make a bid during the bidding period and the highest NET bid wins.
What is a NET bid? Net bid means the total amount that HUD will walk away with. For example, if the home is $400K and you bid that amount, you must deduct the sales commission to the real estate agents. If the commission is at a 6% rate (3% to the listing agent, 3% to the buyer agent) then your net bid is $376K.
How do I know how much to bid when buying a Richmond VA HUD home? Your registered HUD Richmond VA real estate agent should do a CMA to understand the value of the neighborhood and the subject home. Sometimes a lower offer may be warranted. Sometimes a full price offer may be warranted. Sometimes over bidding may be warranted. (If you over bid, be sure to have your agent explain the pros and cons of this) Keep in mind buying a Richmond VA HUD home is like playing in Vegas…you never know what hands other participants are holding. You have to go in with your best offer and be able to detach emotionally if your bid does not win.
What happens if I win the bid? Your agent will be notified that you are the winning bidder and you have a small window of time to complete and submit the contract to HUD. HUD paperwork is very detail oriented and you need to have a Richmond VA Realtor who understand the complexities of buying a Richmond VA HUD home. Once you are under contract, you will have a certain amount of time to have the utilities turned on and have the home inspected for informational purposes only. Remember, HUD homes are sold AS-IS.
These are just some of the basics in buying a Richmond VA HUD home. If you would like to learn more about the process, contact your Richmond VA real estate agent, Shannon Milligan with Keller Williams Richmond, today.
To search HUD homes in your area please visit: the U.S. Department of Housing and Urban Development.
6600 West Broad Street Richmond, VA, 23230 USA
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