3 errors completing contract Hud 9548
Often times when a broker or real estate agent is selling a HUD home, they don’t understand that there are completely different contracts to complete. Knowing this is important to equip your buyer with the most efficient contract review process. HUD has specific contracts that are distinctive from your state’s standard forms.
How will your buyer keep the title? Line item # 2 in the Housing and Urban Development contract asks how your buyer will get title. While in the past this could often be left blank until your buyer decides, this has changed and the best procedure is to discuss this with your buyer before submitting your offer and state in the contract how they will keep the title. You can find common ways of owning the title by calling your local title company.
Repair trusts in line item n. 4 This is an area that is commonly misunderstood. Most newly licensed brokers think this is the cost of escrow, but it has nothing to do with the “cost of escrow.” I’ll make it basic. If you are using FHA financing, you will need to check the HUDHomeStore website to see if the real estate you are bidding on requires a repair security deposit. Repair escrow deposits are required when using FHA loans. Any imperative repair under $ 5000 requires a 203b repair security deposit. Any required repair over $ 5000 is a 203k repair warranty deposit. If you are not using Federal Housing Administration loans, then area 203b or 203k does not apply. ONLY if you are using Federal Housing Administration financing, you must complete this section. Even if the property has an escrow for repairs and you are using non-FHA financing, there is no need to worry about this section. Check the box “seller pays cash or applies for conventional or non-FHA financing” and continue.
Escrow procedures in line item n. 12. This line corresponds to HUD’s processes and rights to your EMD when your consumer does not comply. The most wrong part is that there are two lines where initials are asked and those lines are confusingly close to each other. Over and over again, if there are married buyers in the contract, one agent will have one consumer initial on one line and the other on the next line to the right. Incorrect. Confusing for sure. Right, no! One is a “buyer’s initials” line and the other is reserved for HUD’s “authorized agent.” Run the initials of both buyers on the first line reserved for “buyer”. Be careful as this will cause your contract to be rejected if you do not execute these lines correctly.
What are some of the day-to-day mistakes you see other newly licensed brokers making? Do you have any experience with HUD offerings? Share your thoughts on our blog at HUDSecrets.