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How To Determine House Market Value
Of HUD Homes
_____________________________________________________________________________________________ How does HUD determine the house market value of HUD homes? HUD homes are listed on the market at FHA appraised value which is what FHA has determined the house market value is of the HUD foreclosed property. First, we should distinguish between "Market Value", "Appraised Value", "Market Price" and "HUD Listing Price". It is very important to know the different when buying a HUD home.
Buying A HUD Home | What Is The House Market Value?1. "Market Value" is the most probable price a property would bring in an arm's-length tranaction under normal conditions on the open market. 2. "Appraised Value" is an estimated property's market value, based on established methods and the appraiser's professional judgment. 3. "Market Price", on the other, is what a property actually sells for, its sale price. 4. And finally, "HUD Listing Price" is the FHA appraised value of the HUD foreclosure home. It is the initial listing price, not a reduced listing price. You will need to check with your real estate to see if the property that you are interested in has been reduced. HUD list all of their HUD homes "AS-IS" FHA appraised home value. The appraisals are all FHA appraisals. So, the list price is an estimate of the house market value based on the condition of the property at the time of the appraisal. For HUD homes the appraised house value becomes the list price. The appraised home value does not mean it is going to sell at or close to the list price.
HUD Homes For Sale | Why You Need An Experienced Real Estate Agent!
This is one of the reasons you need an experienced real estate agent! An experienced agent can do a Comparative Market Analysis (CMA) for the HUD home you want to bid on. They take homes that have sold in the area and ones that are still on the market and compare them with the one you want. They can give you a good idea the house fair market value. You will find in today's housing market it is important to do a CMA based on sales of homes in the last 3-6 months instead of the past 12 months. Foreclosures are pushing home prices down in most parts of the country and you need to use the most recent homes sales data in your area to arrive at the fair house market value of the home you want to purchase.
An example would be if the initial list price is $100,000 and you make and get accepted a bid of $105,000 you will have to bring the overage amount of $5,000 plus your normal down payment to closing. THIS IS IMPORTANT! Remember this is only if you use the FHA Home Loan Program for financing. If you are thinking about overbidding then you need to know the following: 1. The "as-is" value = the appraised value. 2. You cannot get a 2nd appraisal for FHA financing. 3. You will be required to submit proof of funds on an overbid. 4. You will be required to sign a Purchaser Addendum to acknowledge the amount of the overbid. 5. You will have to bring cash (cashier check) to closing. You cannot finance the overbid amount and a "Subject to Value" will not support the overbid. Again, this is only if you use FHA financing! To sum up this page, get a real estate agent to determine the house market value of HUD homes you want to make a bid on and if you are using FHA financing do not make a bid over the initial list price if you do not have the overage amount to bring to closing! Author: Al Hardymon
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I have seen where HUD homes have been appraised for 20%-50% more
than what the sale price end up being. Sometimes I am amazed how they come up with the house fair market
value.
One point I want to make and I have made it on other web pages of
this site. If you make a bid that is over the initial list price of the property and you use