Chances are you’ll be getting assistance with this process from Audubon Realty, LLC. If you are not or if you want to be more informed, this section will help you with this critical, detailed process. Please call us at any point that you have questions or want a professional adept at this process on your side walking you through it.

We realize there is a lot of information here, but we wanted this entire topic on ONE page to help you.

How to fill out the sales contract package correctly

  • All the information you submit in the sales contract must match the information submitted in the bid.
  • If you need to make a correction, fill out the contract package with the corrected information and include an addendum which explains the correction. Examples of possible corrections include:
    • Buyer’s name spelled incorrectly
    • Buyer’s address is incorrect
    • Buyer’s financing type is incorrect
    • Note: You cannot change the terms of the contract

Sales Contract Package

The Sales Contract Package contains all the detailed information you need to move the process of purchasing your HUD home along. The package contains:

  • Information Page – When you fill out this page, it will auto-fill the entire contract
  • Sales Contract checklist
  • Instructions for Sales Contract
  • Sales Contract
  • Conditions of Sale
  • Electronic Filing of HUD-9548 Contract Addendum (this is the Purchaser’s Rights and Responsibilities Addendum to the sales contract)
  • For Your Protection: Get a Home Inspection
  • Owner Occupant Certification
  • Selling Broker Commission Addendum
  • Purchasers Rights and Responsibilities
  • Forfeiture of Earnest Money Policy
  • Buyer’s Select Closing Agent – Closing Date Extension Policy
  • Radon Gas and Mold Notice
  • Flood Zone Addendum
  • Buyer Select Closing Agent Contract Addendum
  • HUD Closing Instructions
  • Lead Based Paint Addendum – if property was built prior to 1978
  • Earnest Money Receipt Confirmation

This seems like a whole bunch of confusing information, but we are here to help you every step of the way – we’ll explain each one and make certain you have the details correct and the information you need to get this contract filled out correctly and on-time. Next, we’ll break each piece down for you:

Information Page

The Information Page is an overview of the sales contract information. It must have:

  • The exact accepted bid – no changes. You can reference your Bid Confirmation which can be found in your HUD Homestore account under Review Bids.
  • Title Style: As a single person, As a married couple, etc.
  • Selling Agent/Broker Information – this must match what HUD has on file on the most recent Broker NAID renewal/application. We keep this information up-to-date at all times.
  • Closing Agent/Escrow Company Information – this is Buyer’s choice. The escrow officer’s email should not be a generic business account like closings@abctitle.com. You will need to ask the title company for their Title ID and State License numbers.

Sales Contract

This is a breakdown of how the Sales Contract and other documents included in the packet will look, piece by piece, in HUD-speak. We’re happy to answer any questions you have about this!

  • Names: John H Doe and Mary P Doe – not John H and Mary P Doe
  • If Buyer is a Corp, LLC etc., the sales contract package must include their legal entity state documentation as well as confirmation of signing authority.
  • Financing type – FHA 203b, FHA 203b with repair escrow, FHA 203k
  • Financing type – Cash, Conventional or Other financing not involving FHA
  • Seller will pay reasonable and customary buyer closing costs up to 3% (customary for the area). If these costs are not addressed in the accepted bid, HUD will not pay any of the costs, including the title and closing fee.
  • Owner Occupant Purchaser must occupy the home as their primary residence for 12 months and can not have purchased a HUD owned home as an owner occupied buyer in the last 24 months.
  • Discount at closing – Good Neighbor Next Door, Non-Profit Organization, etc.
  • The sale will close not later than 45 days with an insured or uninsured financed offer, not later than 30 days with a cash offer and not later than 60 days with FHA 203K financed offer.
  • Social Security numbers must be accurate.

Conditions of Sale

    • Assessments are prorated to day of closing
    • Seller makes no warranties or representations concerning the condition of the property.
    • It is important for a Buyer to have a home inspection – if  FHA insured financing is used, $200 of the cost of the home inspection can be financed into the mortgage.
    • Lender letter is now included in the sales contract package.
    • Seller may cancel the contract if it is determined there are title issues that Seller is unable or unwilling to remove.
    • No repairs can be performed on the property prior to closing.
    • Buyer cannot take possession of the property prior to closing.
    • Risk of loss or damage is assumed by Seller prior to closing
    • If property is being offered with FHA insured financing, Seller’s acceptance constitutes a commitment to insure.
    • Buyer understands that Seller’s list price is Seller’s estimate of fair market value.
    • Defective Lead-Based Paint is defined as cracking, scaling, chipping, peeling or loose paint on all exterior and interior surfaces.
    • Lead-Based Paint inspections are now performed and paid for by HUD on properties built prior to 1978 and that are being financed with FHA insured financing after the contract has been ratified.
    • If a LBP inspection was performed prior to contract acceptance, the results will be disclosed by HUD.
    • The effective date of the contract is the date it is signed by Seller.
    • Falsifying information is a felony.

Electronic Filing of HUD-9548

  • HUD-9548 is the sales contract.
  • All parties certify, warrant and represent that no content of the HUD-9548 contract has been altered or omitted in any manner.
  • True and accurate copy.
  • Broker and Buyer have read and understand “Conditions of Sale” and acknowledge that no contract or binding agreement exists unless and until the executed HUD-9548 is returned to purchaser.
  • Falsifying information is a felony and punishable by a fine not to exceed $250,000 and/or a prison sentence of not more than 2 years.

For your protection: Get a home inspection

  • The Buyer has a 15 day inspection period from the date the purchase contract is executed.

Owner Occupant Certification

  • Buyer must occupy property as their primary residence for 12 months.
  • Buyer cannot have purchased a HUD owned property as an owner occupant in the past 24 months.
  • Broker certification is required on this form.

Selling Broker Commission Addendum

  • Full and complete satisfaction of any compensation due Selling Broker.

Purchaser’s Rights and Responsibilities Addendum

  • Condition of Property
  • The Importance of a Home Inspection
  • 15 Day Contract Cancellation Contingency for Owner Occupant
  • Applicable to FHA 203K Financing
  • Other Important Information

KEYS ARE NOT PROVIDED TO BUYER OR SELLING AGENT

Forfeiture of Earnest Money Policy

Failure to close will result in forfeiture of earnest money except in the following special exceptions:

  • Owner Occupant – 100% will be refunded
    Death in the family, recent serious illness that alters Buyer’s ability to purchase, loss of job or income at no fault of the Buyer, HUD determines insured sale purchaser is not an acceptable borrower, uninsured sale pre-approved  purchaser is unable to obtain financing and for other good cause as determined by the field office.
  • Owner Occupant – 50% will be refunded
    Uninsured sale – Despite good faith efforts, Buyer is unable to obtain financing 
  • Owner Occupant – 100% will be forfeited
    In cases where no documentation is submitted or documentation fails to provide an acceptable cause for Buyer’s failure to close or documentation is not provided within a reasonable time following contract cancellation. Chronos Solutions must receive documentation within 10 days following contract cancellation.
  • Investor
    • Uninsured sale – none
    • Insured sale – HUD determines purchaser is not an acceptable borrower, 50% will be returned

Buyer’s Select Closing Agent – Closing Date Extension Policy

Extensions of the time to close are at the Seller’s discretion:

  • Submit a BSCA Extension Request form.
  • Submit Cause of Delay.
  • BSCA Extension form must be received by Asset Manager no later than 5 calendar days prior to contract expiration.
    • 15 day extensions – fee of $375 ($25/day) in certified funds.
    • At time of closing, unused fee is prorated to the Buyer.
    • Granting of initial extension does not obligate Seller to grant future extension requests.
    • Extension fees will be retained by the Seller if the closing does not occur.

Radon Gas and Mold Notice and Release Agreement

  • HUD owned properties are sold AS-IS.
  • Seller has no knowledge of radon gas or mold in, on or around the property other than what is described on the website of the Seller or otherwise made available to the Purchaser.
  • Radon is an invisible, odorless gaseous radioactive element.
  • Mold is a general term for visible growth of fungus.
  • Real Estate Brokers/Agents are not qualified to advise purchasers on radon or mold treatment or its health and safety risks.
  • Purchasers are encouraged to obtain the services of a professional to conduct inspections and tests regarding radon and mold prior to closing.

Flood Zone Addendum

  • For properties located in the FEMA Special Flood Hazard Area.
  • Purchasers agree, if using FHA financing and flood insurance is available through the National Flood Hazard Insurance Program, they will obtain flood insurance throughout the duration of their ownership.
  • Coverage shall be equal to, or greater than the replacement value of the improvements as indicated on the appraisal.
  • Purchasers agree to make flood insurance a condition of any future sale.

Buyer Select Closing Agent Contract Addendum

  • It is the responsibility of the Buyer to choose their own escrow/closing company.
  • HUD will not pay for the escrow/closing service.
  • Authorize Chronos Solutions to release a copy of the sales contract and all addenda to the closing agent/escrow company listed on the form.
  • Must match HUD-9548 sales contract – line 9.
  • To be eligible to close HUD transactions, the closing agent must have a minimum of $1

HUD Closing Instructions

  • General settlement instructions for the closing agent/escrow company.
  • Must be signed by the Closing Company Representative
  • All 5 pages of the closing instructions must be included in the contract package.

Utility Activation Procedures

  • Utility activation is the responsibility of the Buyer.
  • Utilities can be activated for a period of no more than 72 hours.
  • A cost of $125 will be collected from the Buyer prior to approval to cover the cost of re-winterizing the property. This is only between Oct 1st – March 31st.
  • Chronos Solutions must authorize all utilities to be activated before the utilities can be turned on.