Overbidding on HUD REOs
Looking to buy a HUD home? FHA recently changed the program around to make it easier for buyers to purchase properties and renovate them. Now buyers can overbid on HUD homes, obtain FHA renovation financing (203K), and they don’t have to bring in the difference!
Heres the deal. For properties that are FHA foreclosures (you can find a list at hudhomestore.com) an appraisal has already been completed on these homes. For buyers obtain FHA financing they are required to use that apprasial. In many cases buyers are offering more than what that home sold for. If they offer more than what that appraisal put the value at and they are obtaining FHA financing buyers would have to bring in the difference. HUD made some changes to the program late in 2013 that now allows those buyers to take out a FHA 203k Renovation Loan and FHA now allows a new appraisal to be completed. What does that mean? Basically, if the new appraisal supports the value the buyer no longer has to bring in the additional cash. They will simply need their 3.5% required down payment. If you find yourself getting ready to bid on a HUD REO give us a call and we can go over all of the different options!
This topic is so important we went to some other industry experts to get there opinion on the topic! Joe Daily Renovation Lending Manager at Amerifirst and David Howard from Century 21 C. Howard comment on the program changes.
