HUD Inspection - No Power

[Daniel Florence]

I'm looking at making an offer on my first investment property which is HUD home. The listing agent said there is no power and the power will not be turned on for the inspection. Is this typical for a HUD inspection? What are some the risks with having an inspection w/o the power? At this point the numbers make sense, but I'm hoping to get some feedback from seasoned investors on this one. Thank you!

[Michael Noto]

@Daniel Florence This is typical for a HUD transaction up here in Connecticut and I am assuming this is the norm for your market as well.

Like others have mentioned, you can get the utilities turned on for an inspection for a defined 3-day period if you are the winning bidder, but this is something you and your agent will have to coordinate with the field service manager and local utility companies. You incur the costs of turning on the utilities and the usage.

All of the electric and gas bills for the property will actually need to be transferred into your name for this time period as well. HUD will not put these in their name from what I've seen. You will also need to pay a plumber to de-winterize for the inspection if you want to test the plumbing.

One thing to keep in mind is the field service manager (FSM) will then coordinate getting the property re-winterized after your 3-day window has expired. So in essence in all the properties that my clients or me personally have closed on with HUD (about a dozen here in CT) have been winterized properties at the time we closed.

The past of least resistance is to just not do an inspection if you are ok with that risk and think you have accurately budgeted for anything that could possibly go wrong. 

In the end, just make sure you have an agent working for you that has experience closing HUD deals and a lawyer/title company that has the same level of experience.

As a buyer what is better than having an experienced agent to guide you through an intricate deal and it doesn't cost you a dime? HUD pays the broker commissions.