Dealing with HUD Foreclosures and repairs
I recently won a bid for a HUD foreclosure and since the time of my bid acceptance there has been some water damage done to the property because of recent storms. Will HUD fix this or issue a credit before closing
|LM says: Michelle, probably the answer to your question is found in your sales contract. I have purchased several HUD foreclosure so I am familiar with how they operate but I am not sure things are the same in your state and/or with the management company you are dealing with. They probably are but I am just not sure. |
However based on my dealings with HUD here in Georgia one of two things are probably going to happen. Either they are going to give you a credit for the damage (your best choice in my opinion) or they will give you the choice to get out of the contract. There is a rare third possibility that they might repair it themselves if it’s something simple enough but I think that is unlikely.
Here is why I think the credit is the best option and how you should do it…
Get yourself a camera and take pictures of the damage. Then get yourself a quote for the repair preferably from what I call a “retail” contractor, in other words an overpriced contractor and have your agent ( I assume you are using one) turn in to HUD the picture and the quote and then ask for a reduction in selling price to cover the repairs.
The high priced quote is necessary because at this point you might not know exactly if the reduction in
price will really cover all the damage repair. What you really want is to get a quote from a high-priced contractor and then do the repair with an investor’s contractor so that hopefully you can get the same work done for less.
The reason I say I prefer to get the credit and then do the repair myself instead of having HUD do the repair is for control. In other words you will have no control of what kind of repair HUD makes but you will know exactly what has been done and that it has been done right if you do it.
Also, reducing the sales price is an opportunity to make the house purchase and even better deal for you since the damage gives you a legitimate reason to ask for the reduction.
Finally, if you think the damage is too much, too bad or something you just don’t want to deal with then you can probably be asked to be let released from your contract since the material condition of the property has changed since the moment you placed your initial bid. Again, your agent might help you with this if you are using one and/or you might have to consult with a lawyer which your agent might also have.
One last thing…since you mention that it is water damage I just want to be sure that even though your house might be repairable, that the damage is not like a flood or something of that scale that might significantly change the neighborhood and in turn affect the value or condition of your property.
Let us know how this turns out please…
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