HUD Properties, Process and Earnest Money Check Joys

As many of you know, I’m something of an accidental real estate agent. I find myself managing the office of a team of agents, and my focus is on REO (aka: Bank Owned) and Government Owned property sales. One of my main functions is navigating the perilous maze of intrinsic weird contract “stuff” inherent in these transactions.

One my key sellers is HUD, and we’ve been seeing a few repeated issues with these contracts. HUD is pretty particular about earnest money checks. The biggest issue we’ve seen: the payee line. HUD wants to see “Escrow Company OR Buyer’s Name”, eg: “Chicago Title or John Doe”.

With the above, there’s another common issue: check type. They want either a cashier’s check or a US Postal money  order. Sorry, no personal checks; they’re looking for certified funds. Below is a slide created by BLB (the company charged with selling all HUD owned homes in Washington, as well as a few other states) to make it more clear.

With all this, we send tons of information as part of these transactions. As tempting as it may be to blast through these transactions minimizing the amount of reading you need to do, I counsel you against that. These hiccups do cause problems for transaction, thus delays and sometimes cancellations. A relatively small investment in time can, really, save you a lot of aggravation and grief.