What is a HUD home?     

What Is a HUD Home? http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

What is a HUD Home?
A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

Who can buy a HUD Home?
Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma, HUD could sell a HUD home at a discount to you!

How are HUD Homes sold?
All properties available for purchase by the public are offered for sale at Internet listing sites maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.

Are there any special programs?
Properties in designated areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives.

Should I get a home inspection?
We encourage you to get an inspection after your offer is accepted. All HUD Homes are sold AS-IS, without warranty. HUD will not make repairs nor pay to correct any problems.

What about financing?
Although HUD does not offer financing directly, some of our homes qualify for FHA-insured loans. Shop around for a lender to find the best loan terms. Find out how an FHA loan can help you.

 

The Federal Housing Administration (FHA), which is a part of the Department of Housing and Urban Development (HUD), provides federal mortgage insurance which ensures that mortgage lenders will be reimbursed in the event homebuyers default on the mortgage. When a lender is forced to foreclose on an FHA-insured single family home, townhome, or condominium because the owner can no longer make payments, it can file a claim with FHA for the balance due on the mortgage and convey title of the property to HUD. A HUD Home, therefore, is a one-to-four unit residence acquired as a result of a foreclosure on an FHA-insured mortgage. (www.hud.gov) 

How Are HUD Homes Sold?

When a HUD Home becomes available for sale, usually it is listed on the Multiple Listing Service and on HUD's home page on the Internet. Any real estate broker who is properly registered with HUD may submit contracts for purchase. Brokers are used because of their expertise in the local residential real estate market and because HUD does not have sufficient staff either to show properties to prospective buyers or to assist in those other aspects of homebuying normally handled by brokers.

Most HUD Homes are initially offered on a priority basis to owner occupant purchasers (people who are buying the home as their primary residence).

Following the priority period, unsold properties are then available to all buyers, including investors.

HUD Homes are offered for sale at fair market value, based on a recent appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial "Offer Period" homes remaining unsold are offered on an "extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer.

HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender. 

How Do I Learn of Available Properties?

Properties acquired by HUD will display a sign identifying who is managing the property for a while before they are listed for sale. What is happening during this time is the property is appraised, title issues may need to be resolved, and a determination is made about the property's eligibility for HUD's discount sales programs. Listings are posted on the Internet and the Multiple Listing Service.

What Are Some of the General Sales Conditions?

HUD Homes are sold in their as-is condition without warranty. Because of HUD's as-is policy, HUD Homes can often be a great opportunity for the fixer-upper. Not every HUD Home needs fixing up, but when one does, it can be a real bargain. For example, HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. Also, keep in mind that on most sales the buyer can request HUD to pay all or a portion of certain financing and closing costs.

HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase