While HUD properties are sold as-is, without repair or guarantee, that does not mean a buyer can’t or shouldn’t conduct a home inspection to learn as much as possible about the property. While HUD encourages home inspections, they are not required, and are the buyer’s responsibility to arrange and pay for.
Here’s what you need to know:
- A home inspection is NOT the same as an appraisal. An appraisal is conducted by your lender to determine if the home meets minimum requirements for the type of financing you’re seeking, and if they feel the home is worth the purchase price. A home inspection is arranged by you, and it evaluates the physical condition of the home. An appraiser protects the lender. A home inspector protects
- This is not the same as having a handy friend come look at the house with you! In most states, home inspectors must be licensed. A home inspector is a trained professional who is impartial and is working for your protection. Check with your broker, friends, or online for referrals.
- Don’t wait! When purchasing a HUD home, you will have a limited amount of time to conduct a home inspection after your offer is accepted (ask your broker), so it’s a good idea to have an inspector in mind and ready to go.
- A home inspection may take 2-3 hours to complete, as the inspector will be checking components not easily visible, such as the foundation/crawlspace, roof, attic, heat/air conditioning, plumbing, wiring, insulation, etc.
- Depending on the property (is it deemed FHA insurable or not?) and the type of offer (are you buying as a home-owner or investor?), a home inspection finding may or may not be sufficient reason to back out of your contract without penalty. Your contract will provide details on whether you can recoup all or part of your earnest money deposit. Speak with your broker and read your contract carefully.
- While it’s true that HUD will not allow repairs to their listings, obtaining a home inspection allows you to make an informed decision about your purchase, and it could prevent unexpected expenses after you buy your home.
In conclusion, a professional home inspection can provide tremendous value—and peace of mind—to a buyer.