Often when a real estate broker is selling a HUD home they don't comprehend there are completely different contracts to fill out. Knowing this is imperative in equipping your buyer with the most efficient contract review process. HUD has specific contracts that are distinctive to your state standard forms.
How Will Your Buyer Be Taking Title? Line Item #2 on the Housing And Urban Development form asks for how your buyer will be holding title. While in the past this often could be left barren until your buyer reconciles, this has changed and the best approach is to analyze this with your buyer prior to submitting your contract and enter in to the agreement how they'll be holding title. Common ways of holding title can by calling your local title .
Repair Escrows On Line Item #4 This is a commonly misunderstood area. Most agents/buyers think this is how much escrow costs but it has nothing to do with the "escrow" at all. I'll make it simple. If using FHA financing you'll need to check the HUDHomeStore website to see if the home you are bidding on requires a repair escrow. Repair escrows are necessary when using FHA financing. Any repairs required under $5000 require a 203b repair escrow. Any repairs required over $5000 are a 203k repair escrow. Now, if you aren't using FHA financing then the 203b or 203k area doesn't apply. ONLY if you are using FHA financing do you need to fill this section out. Even if the property has a repair escrow on it and you are using non-FHA financing (conventional, hard money loan, all cash, other) then you need not worry about this section. Check the box "seller is paying cash or applying for conventional or financing not involving FHA" and proceed.
Earnest Money Procedures on Line Item #12. This line pertains to the procedures and rights HUD retains to your EMD when your buyer fails to perform. The most confusing part is that there are two lines on which require initials and those lines are right next to one another. Often, if there are two purchasers on the contract an agent will have one buyer initial one line and the other on the following line to the right. Wrong. Confusing yes. Correct no. One is a "buyers initials" line and the other is reserved for HUD's "authorized agent". Squeeze both of your buyers initials on the first line reserved for "purchaser".
What are some everyday mistakes you see other newly licensed brokers make?
How Will Your Buyer Be Taking Title? Line Item #2 on the Housing And Urban Development form asks for how your buyer will be holding title. While in the past this often could be left barren until your buyer reconciles, this has changed and the best approach is to analyze this with your buyer prior to submitting your contract and enter in to the agreement how they'll be holding title. Common ways of holding title can by calling your local title .
Repair Escrows On Line Item #4 This is a commonly misunderstood area. Most agents/buyers think this is how much escrow costs but it has nothing to do with the "escrow" at all. I'll make it simple. If using FHA financing you'll need to check the HUDHomeStore website to see if the home you are bidding on requires a repair escrow. Repair escrows are necessary when using FHA financing. Any repairs required under $5000 require a 203b repair escrow. Any repairs required over $5000 are a 203k repair escrow. Now, if you aren't using FHA financing then the 203b or 203k area doesn't apply. ONLY if you are using FHA financing do you need to fill this section out. Even if the property has a repair escrow on it and you are using non-FHA financing (conventional, hard money loan, all cash, other) then you need not worry about this section. Check the box "seller is paying cash or applying for conventional or financing not involving FHA" and proceed.
Earnest Money Procedures on Line Item #12. This line pertains to the procedures and rights HUD retains to your EMD when your buyer fails to perform. The most confusing part is that there are two lines on which require initials and those lines are right next to one another. Often, if there are two purchasers on the contract an agent will have one buyer initial one line and the other on the following line to the right. Wrong. Confusing yes. Correct no. One is a "buyers initials" line and the other is reserved for HUD's "authorized agent". Squeeze both of your buyers initials on the first line reserved for "purchaser".
What are some everyday mistakes you see other newly licensed brokers make?
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