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You will come across this type of statement “property to be sold as is only and is subject to HUD Guidelines 24 CFR 206.125” in MLS listed properties from time to time. You should know that this verbiage will affect how your offer is viewed and your ability to negotiate a deal that makes sense to you. In most cases, you might be wasting your time trying to make an aggressive offer on that property.
This language is disclosed in foreclosure listings aka bank owned or REOs, where the home was financed using a reverse mortgage note that defaulted due to the borrowers passing, failure to pay taxes, or both.
A reverse mortgage is defined as a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves
HUD regulates the terms under which these properties can be acquired, sold, marketed, & their listing treatment, thus the verbiage you are going to find in these listings. If the property is an actively listed REO, a Buyer’s Agent can represent a Buyer the same as a traditional foreclosure. Disclosing the subject conditions communicates that the seller has restrictions under which they are obligated. So now you know what to watch out for with some bank owned properties, what that statement really means to an investor, and how to deal with those types of properties.