Below I recount my personal experience with buying a HUD owned home.
The short story is this: Buying a HUD owned home was the worst buying experience of my life.
My realtor had never seen it before, my mom who’s been in real estate for 30 years never saw it before, so this situation is probably a one off, unique to me story but I still feel the need to share my ridiculous experience in purchasing a HUD owned home.
Because who knows, this story could be one of 100,000 that just never got told. (So tell me in the comments!) And if this is happening more frequently than not, then something is obviously wrong with the system.
Back in July of 2016, the boyfriend I purchased a HUD owned home. Yeah, we heard the rumors that HUD was difficult to deal with but the opportunity was just too good to pass up on.
Now is as good a time as any to note that I’ve been a part of numerous real estate transactions in my lifetime and I have never witnessed a more ridiculous process to purchasing a home than the one we went through.
Main Street House was so hard to get a contract secured on that I actually vowed not to purchase another one ever again; and the only reason I can come up with is that it was a HUD owned home. Okay, okay, okay… And probably partly because of the real estate agent. But I’m not here to bash anyone (it was his first sale with HUD, I guess I have to give him a break.) So we’ll blame it on the government and here’s why…
Why Buying a HUD Owned Home Was the Worst Experience (EVER)
First, I wasn’t too fond of the offer process.
They Want Originals, Originals, Originals
First of all, HUD doesn’t do anything online, they want originals of everything.
I mean come on, it’s 2017. Some people are NOMADS for a LIVING. Do they really expect us to find a printer, ink, paper, pen, envelope, stamp, and sometimes even a mailbox for that matter?!?
They Never Counter Offer
Hud doesn’t do a traditional counter offer. What I mean by this is that when you put an offer in, they don’t counter you offer. They simply reject your offer and encourage you to place another offer. So essentially, you are bidding against yourself!
Not giving a counter offer means that HUD is never locked into an agreement with anyone just in case a higher offer comes in while you’re negotiating with them.
The Pace Was Too Fast
The worst part is how quickly they required paperwork from the buyer. We had to leave a client’s job in the middle of the day to get our signed offer to them on time – we had to if they want the original copies, WITHIN TWO DAYS, signed in blue or black ink but with blue being the preferred color of the two. They also don’t accept fax, e-signature or anything online or through email. Which means that you have to mail out the paperwork the same day you hear back from them in order to get it there on time, so it’s a good thing I’m addicted to checking my email.
But the best part is….
…(sense the sarcasm here?) once HUD receives your paperwork, you don’t hear from them for an entire week. And then…. when you DO hear from them, they tell you that you didn’t supply the required paperwork, in our case, the proof of funds didn’t have my home address on it, even though that wasn’t one of the 5 required items they listed (such as name, enough to cover purchase price, etc.)
And although the real estate agent also believes we submitted the required paperwork he says “it’s a battle we won’t win.” So off to the bank I go again in hopes they can piecemeal something together for me with a 6th requirement — all on the same piece of paper.
We didn’t hear from HUD for 3 days after sending in the new proof of funds and when we did hear from them, it was to say they accepted our new proof of funds and now it would be another 3 days until we received the executed agreement. AND THEN it took over a week to get an executed agreement.
Second, the closing process was WEIRD.
If you were following along while we were searching for a house to buy you may have read this post, which details (like hour by hour) the problems we had with closing on Main Street House. Only it doesn’t explain what happened after “we closed.”
It all started when they wanted to schedule the closing the Friday before the July 4th holiday weekend. I didn’t think this was a good idea because who’s going to be around then? July 4th fell on a Monday in 2016 which meant everyone and their mother took off on Friday for a long weekend.
Then, we didn’t even know if we were actually going to close on Friday until the Wednesday night before at 9:20 PM! So as of that Wednesday night, we were closing on Friday at 9am.
But when Thursday at 5pm came and we still didn’t have all the paperwork we needed to close they rescheduled to 2pm on Friday.
At 2:20pm on Friday (becuase the realtor was 20 minutes late) we found out we still didn’t have everything we needed and we were expected to just sit and wait around for whatever final approval we needed. After about an hour of nothingness, we were told to just sign the paperwork, leave our money and they’d let us know when we were “officially closed.”
A little after 5pm that day we were told we’d have to wait until Tuesday (since Monday was July 4th) to officially close. Which meant we’d probably have to sign new paperwork because we’d owe a little less in taxes because the government held it until July 5th instead of the 1st. Well… not only did we not sign new paperwork but we didn’t hear from anyone until Wednesday afternoon!
They said there was an unpaid trash bill that we would probably get stuck paying but they would let us know. At that point in time, we were seriously considering backing out of the deal but were told we’d lose our earnest deposit of $1,000 if we did (like how? They were the ones who couldn’t close!)
Then, on Friday- one FULL week after closing we were told to meet the realtor at the house, give him the locks to the house and pay the trash bill. The realtor showed up later that day with “good news, HUD paid your trash bill!” (My trash bill? I’m sorry, that was not my trash bill. That was an oversight on someone’s part and not supposed to be paid by the new buyer in the first place.)
Anyway, we never got access to our house until July 8th even though we technically closed on July 1st. Do not ask me how this was allowed but it was. And the thing that made me a little upset is that we were technically paying on Main Street House from the first of July, yet we weren’t allowed in it! The whole thing just made no sense.
So to sum up an already long story, HUD makes you sweat. They cause anxiety, stress eating and all around bad vibes. Caused mainly by the fear that we were going to wind up losing Main Street House because of the over-stringent rules and regulations. And because HUD never counter signs an offer until they have exactly what they need, no matter how small of an item, anyone could come in and steal the house out from under you!
After this whole debacle, I found out a lot of real estate agents actually dread when a client falls in love with a HUD home because they know what a pain it is to deal with them. The government can be pretty difficult and ridiculously picky with paperwork and not to mention contradictory. (Just for shits and giggles, here’s an example of a question on a form for a real agent to answer about a home, “are the walls clean and not in good condition?” Yeah. Clean and NOT in good condition.)
So if you’re thinking about buying a HUD owned home, make sure you have a good real estate agent who has HUD experience (we wound up using the listing agent to make things easier… but he was inexperienced and it did not make things easier.)
I know I’m sitting here talking all big like “I’m NEVER buying a HUD owned home again!” But the truth is, if I found a steal like Main Street House again, I’d go through the stress all over again. So don’t let me scare you. If a house is worth it, go for it. Just don’t say I didn’t warn you!
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