Won a HUD property. FHA Loan question

[Ruben M.]

This is actually my second HUD home, but I didn't do much research 7yrs ago when I bought my first one. This time I monitored the bid results and did my own analysis for how my local market was doing. The recent average has been an 86% net to HUD. There was one property that was 72% net to HUD, but I think that particular one was way over priced and it had an HOA that I'm sure HUD didn't like having to pay. The bid I got accepted for last week was 84% net to HUD. I could have probably got it a little cheaper if I waited since it was on the market for over 90 days, but I had put earlier bids in weeks before and kept getting countered at 88%. I didn't want to wait any longer because my realtor seemed to be getting annoyed and I actually want to live in this house so it was personal. Plus I think one more price drop and investors would have realized how much of a good deal the property was because the listing was done very poorly. They only put the square footage of the first floor, and from the pictures and description you wouldn't know there was another floor to the house.

I had preapproval from 4 different lenders and before I won, one of my lenders said it could be difficult to close because they won't consider the house move in ready since there isn't a stove and refrigerator. That was one of the conventional loans. Because of this, I am using the one lender that offered me FHA financing. The HUD home was listed as Insured so my question is, does the FHA appraisal from HUD still carry over or do FHA loans do their own appraisal also? I will be speaking to the lender this afternoon, but thought I would share my story and maybe gain some knowledge beforehand.

[Greg H.]

@Jeff Copeland   

HUD absolutely orders an FHA appraisal before listing the property and the home is listed at 100% of the value. The appraisal is valid for 120 days. HUD actually used to provide them to the buyer once the bid is ratified until about 5-6 years ago

The PCR requirements are different with a HUD home and a new appraisal may or may not be needed. A escrow might be required at closing to correct a deficiency

@Ruben M.

I cannot stress enough as to the need to go with a lender who has experience with HUD homes(not just FHA) and has a work around in place in the event the utilities are not able to be activated as well as an escrow provision. I should really state again how IMPORTANT this is as it is the biggest reason HUD properties fail to close and I end up buying them on down the line