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.

"Market Value" is the most probable price property would bring in an arm's-length tranaction under normal conditions on the open market.

"Appraised Value" is an estimated property's market value, based on established methods and the appraiser's professional judgment.

"Market Price", on the other, is what a property actually sells for, its sale price.

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.

FHA Appraisal Report

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.

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.

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