As more buyers are hitting the market and we begin to see multiple offers on listings, please make sure you are aware of the info below when it comes to HUD REO.
We are starting to see multiple offers on HUD homes…..Some buyers are beginning to offer above the list price in order to secure the property.
THIS IS A PROBLEM IF YOUR BUYER IS USING AN FHA LOAN!
FHA will only endorse the loan based off the HUD list price (plus any additional rehab if doing a 203k)…..so if the list price is $100k and your borrower offers $105k not only will they have to bring the 3.5% down payment of the list price to the closing table they may have to bring the additional $5k as well! Even if they qualify for the $100 down they would still have to bring the additional $5k!
When you run into these HUD REO scenarios make sure you remember to ask your buyer and your buyers agent if they offered above list price up front and at time of application! Don’t wait until the last minute to let bad news blow up in your face….let everybody know in the beginning so they can be prepared.
Also, take some time to give your Realtor partners a heads up as well…
Thanks to Tony Collins at PrimeLending for sharing!