How to Evaluate HUD Properties
There are three main ways to evaluate HUD properties: the HUD property condition report, the personal walkthrough, and the traditional inspection.
Evaluating HUD Properties with the Condition Report
Whenever a HUD property is listed online, it is accompanied by a condition report. These PDF documents should be read thoroughly. They detail the results of an evaluation done by HUD inspectors and include information on the condition of:
- the interior and exterior of the structure
- the plumbing
- the roof
- the electrical and HVAC systems
- the built-in appliances
The HUD property report will also include a simple picture of the exterior and some basic information such as the home’s square footage. HUD property reports tend to be quite thorough. However, it is important to keep in mind that HUD does not guarantee the information provided. The majority of information about HUD properties is collected from a visual examination; there may be additional problems with the house that cannot be seen.
You can use the HUD property report to get a general overview of the home’s condition and the amount of money that will be required for repairs. When major repairs are required, HUD often lists an estimate on the property’s webpage (look for this on the database listing, not in the condition report).
Evaluating HUD Properties with the Personal Walkthrough
Before bidding on HUD properties, you may visit the homes with your realtor. Bring along a printed copy of the condition report and take a look at the recorded damage. If there is any additional damage, make a note of it. It’s a good idea to carry a camera; photographs can help you better remember the property after returning home.
Make appointments to view the homes in day light hours. Most HUD properties are not connected to utilities, so it’s easy to miss damage in the dark.
Evaluating HUD Properties with the Traditional Inspection
If your bid is accepted, you are entitled to have a professional property inspection done before the close of escrow. Some realtors tell their clients that this is an unnecessary step. However, it may be important to you – especially if you suspect unseen problems with the home.
The HUD condition report does not check for mold or radon gas. If you live in an area where these are a concern, it’s a good idea to have the HUD property tested.
The professional inspector may be able to find problems that were not in the condition report – knowing about these issues ahead of time could save you a lot of money.
The Final Walkthrough
HUD encourages buyers to take a final walkthrough before the close of escrow. This is your last chance to identify any major problems. If there is a new problem with the property (i.e. someone broke in and stole an appliance or the roof now has a leak), you should contact the HUD offices immediately.
By carefully evaluating HUD properties, you can save yourself a lot of time and money. It can be a hassle to go through all the steps. But, knowing that you’ve made a smart choice is always worth it.