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  • HUD homes are sold AS IS.  HUD will not make repairs for home inspections or appraisal inspections.

  • HUD does send an appraiser to the house to assess its condition and determine value by FHA’s standards prior to putting it on the market, but HUD will not release the appraisal. The buyer will have to get a new appraisal ordered by their lender.

  • Look at the ‘Property Condition Report’ and the ‘Property Listing Disclosure’ by clicking on the Addendums Tab in the property listing at to get an idea of what repairs could be needed.  You will not get a detailed account of the repairs.

  • FHA 203b w/ repair escrow allows the buyer to escrow repairs that are no higher than $10K.  If higher than $10K, the buyer will need to get a conventional renovation loan, an FHA 203 (k) loan, or pay cash.

  • The buyer can use VA or Conventional financing, but if the appraisal or termite inspection requires any repairs or treatments in order to satisfy the loan, they can only be don AFTER closing.  So, the buyer’s lender has to allow a repair escrow.  Many don’t, so that is why FHA 203(b) w/ repair escrow, FHA 203(k), or other renovation financing is used.

Repair Escrows

  • This is not a gift from HUD. The escrow amount is paid by the buyer.

  • The sales price remains the same, the escrow amount is added to the mortgage.

  • All lender required repairs must be escrowed and completed after closing.

  • The lender holds the escrow for the repairs done after closing (For questions about this, speak w/ a lender)

  • HUD will not allow repairs before closing.

Appraisals and Meeting Appraised Value 

  • Buyer gets their own appraisal (HUD no longer gives the buyer or their lender a copy of the appraisal)

  • What repairs need to be done are determined by the buyer’s own appraisal

  • If the appraisal value is lower than the bid price, the buyer must bring the additional funds to closing.  A low appraisal is not an out on the contract to get a refund of the earnest money deposit.

"Every home is...

   Someone's perfect pearl."

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