What if a HUD home is damaged before closing?
I am in contract to buy a hud home. I placed a bid on April 20th 2009 and I was set to close 7/31/09. Unfortunately, the home was broken into sometime between thursday 7/23 and wednesday 7/29. The vandals stole all of the copper pipes. I got an estimate of about $7000 to replace them. The problem gets worse. My lawyer informed hud of the situation on 7/23 and I supplied them with a written estimate for the repair and the police report info. They told me that if I wanted to close on 7/31 they could not adjust the sale price ($145000). They said it would take 1-2 weeks to see if they could do anything. Problem number 2, my loan commitment and rate lock (5%) with Wells Fargo expire next week. What do I do? I found a post online from someone with a similar problem. They had 20K worth of damage and it took 2 months for hud to tell that person they would only lower the price $3500. The person backed out of the contract. Hud then re-listed the home for 40K less than that person was willing to pay. Is hud in the business of screwing people over? Am I wasting my time? If hud does something similar to me can I sue them? I have invested roughly 4K into title searches, lawyer fees, and other docs, not to mention the time and aggravation I have gone through. This has honestly been the 2nd worst experience of my life (the worst was the loss of a loved one). Please Please Please HELP. I can not afford to lose the money I have already invested and I definitely can't afford another $7000 for the plumbing repairs.
- Ed AtunLv 71 decade agoFavorite Answer
HUD has many flaws but they do not cheat you. If their HUD home is vandalized, you don't have to buy it. You get your money back. They won't ever cheat you out of your earnest money.
But they do not have any provisions for "repairs" that come from vandalism. All of their "repair" programs are for pre-existing problems. So you cancel. Then you can buy it later when Hud makes its adjustments (either the work or the price or both).
- Anonymous1 decade ago
HUD contracts state that the property is in 'AS IS' condition and therefore they legally are not responsible for anything that may happen after the signing of the contract.
With that said, they are not in the business of screwing the public. They genuinely try and come up with a solution to any problem they encounter before closing and are fair to all parties involved.
The reason they say they can't adjust the price before your estimated closing date is the rate changes daily. If they adjust the price now it may be a disadvantage to you and to them. They have to take in consideration what lender is handling the loan.
HUD has a set list of lenders. Contact the Escrow Officer handling your transaction who will be able to tell you the status of your transaction.Source(s): 16 yrs real estate Transaction Coordinator HUD Specialist Title & Escrow Officer Loan Assistant
- 4 years ago
HUD will not permit you to make any repairs before closing. If the home is not in move in condition, then it doesn't qualify for a conventional loan. Now it sounds like there is a big difference as to the repairs. You're saying $1,000 and the appraiser says $15,000. I'd believe the appraiser and that's who Quicken will believe. You need a 203K loan. What repairs are shown in your inspection report? realtor.sailor
- Spock (rhp)Lv 71 decade ago
you can't successfully sue HUD over this -- they didn't do the breakin.
your lawyer was supposed to have written your offer so that the house had to stay in the condition it was in when you offered, as documented in .... [attached to the offer].
so you back out. this happens with HUD homes. RE professionals know it happens.
sry, but it seems you're going to be out the $4k you've put into this home so far.
The clue you should have gotten on this 'deal' is contained in the phrase "I can not afford to lose the money I have already invested ...."
If you have zero cushion on a deal and are so strapped for cash that you can't afford to lose the upfront costs [they'd be a tax deductible loss, I believe] -- don't do the deal. Don't even offer on the deal. You can't afford it.Source(s): properties investor