Closing HUD Properties

Once a bid is accepted and a contract has been ratified there is a set number of days to close on a HUD property. There are several activities that may need to be completed prior to closing.

Performing the Home Inspection and a Systems Check
All HUD properties are sold in their "AS-IS" condition, HUD does not make any repairs to the property. As such, it is extremely important that the purchaser performs a home inspection with the utilities activated. The home inspection will provide the most current condition of the property and inform the purchaser of any repairs that may be necessary. The gas, water, and electricity should be activated at the time of the home inspection. To activate the utilities a permission form can be found under HUD Forms on our website, this should be completed and faxed in for approval. Utilities may be activated for a period of 72 hours the home inspector should be scheduled to complete the inspection during that timeframe. Purchasers will have 15 calendar days to conduct, at the purchaser’s expense, any inspections, tests or risk assessments desired by the purchaser.

Obtaining Property Documents
After the contract is ratified the lender may require a copy of the FHA Appraisal and the Termite Inspection to complete the sale. These documents can be obtained by using the "Appraisal and Termite Request Form" available under HUD Forms on our website.

Contract Addendums
Any change to the sales contract requires a contract addendum. However, most of the sales contract may not be changed after contract ratification (signed). The following items may not be changed after the sales contract has been ratified:

• Sales price (line 3)
• Closing Costs (line 5)
• Commission (line 6)
• Net to HUD (line 7)
• The Primary Purchaser (the purchaser named on the bid submission)
• Broker Information

Purchasers may be added to a sales contract by using the "Addendum to Add Purchaser" form. Purchasers may also be removed from the sales contract using the "Addendum to Remove Purchaser". If your purchaser is an owner occupant then the primary purchaser (the one entered on the initial bid) may not be removed from the sales contract. If the financing being used to purchase the property changes "Addendum to Change Financing" must be submitted. Financing may change such as from conventional to FHA, FHA to conventional, or from one type of FHA loan to another. If the type of FHA loan is changing such as 203b to a 203b repair escrow, then a home inspection report should be submitted with the addendum. All, submitted contract addenda will be reviewed and either approved or denied.

Scheduling your Closing
Once the contract is ratified, a purchaser has 45 days to close the property; however closings may occur in less then 45 days. A closing date must be scheduled with the HUD-designated Closing Agent. HUD has appointed closing agents on a separate contract to act as their representative in the closing. HUD-designated Closing Agents are assigned HUD properties by county. Each property is assigned a closing agent and the property must close with the designated closing agent present. Third-party closing agents may also be used but the closing date must be scheduled with the HUD-designated closing agent and they must be present at the closing. Any additional cost for using a third-party closing agent must be paid by the purchaser.

Requests for Additional Time to Close
In the event that the property cannot close within the timeframe provided on the HUD Sales Contract, an extension request must be completed to keep the contract from expiring. This extension request must be submitted regardless of the reason for the delay in closing. The "Extension Request Form" can be obtained on our website under HUD Forms. The extension request form must be accompanied by the extension fee and an explanation letter and sent to the Closing Agent.

Contract Cancellation
In the event that a contract must be cancelled the property will be re-listed the following Friday after the cancellation has been processed. If a purchaser must cancel regardless of the reason, then a cancellation request form must be submitted along with an explanation of the reason for cancellation. If the cancellation is due to a loan denial from a lender, then the denial letter must accompany the cancellation request. If the cancellation is based on a property condition issue then a copy of the Home Inspection must be included with the cancellation request. The decision regarding the refund, forfeit, or 50/50 split of the earnest money deposit is based on HUD guidelines as stated in the "Forfeiture and Extension Policy".