How To Buy a HUD Home HUD Foreclosures For SaleDepartment of Housing and Urban Development (HUD) residential foreclosures are available throughout the United States. The sales process for purchasing a HUD home isn’t quite the same as you’ll encounter when buying a home from an individual, so take a few notes before you go home shopping.

What is a HUD home?

The Federal Housing Administration (FHA) is a part of HUD—the part that provides federal mortgage insurance. If a foreclosed home was purchased with a loan insured by the FHA, the lender can file a claim for the balance due on the mortgage. FHA pays the lender’s claim, then transfers ownership of the property to HUD, which sells the home.

How do I find a HUD home?

You can view HUD listings by following state links on HUD’s Web site. Each state’s Internet destination is set up a little differently, so take some time to browse the search engines and layout.

When you’ve located a home you would like to see, any HUD-approved real estate office can show you the property. They are listed on the WEb site. HUD employees do not work with home buyers —you must use an agent.

Do I simply make an offer to purchase a home?

HUD foreclosures are sold using a bidding process. There’s an Offer Period, during which sealed bids are accepted from your agent. At the end of that period, all offers are opened. HUD will generally accept the highest bid, or the bid that brings them the highest net.

If the home remains unsold after the initial period, bids are opened as received.

If your bid is accepted, your agent will be notified within a day or two. You will be given a settlement date, usually 30-60 days from the date of your accepted contract.

HUD will pay real estate agencies a commission of up to 6% for the sale of the home. Be aware that to get paid, the selling agent must insert wording in the contract that verifies HUD will pay his or her commission.

Will HUD finance the home?

Should I have a professional home inspection?

Home inspections are recommended for any home purchase. You should inspect a HUD foreclosure before you make the offer to purchase. It will help you determine a bidding price, especially if repairs are required.

Homes build prior to 1978 may contain lead paint, so learn more lead paint hazards before making an offer. Other items to consider are asbestos content, buried storage tanks, and other environmental hazards.

Can I buy a HUD foreclosure for investment purposes?

During the initial offering, HUD homes are usually available only to those who wish to live in the home. If an owner-occupant does not bid on the home, investors are allowed to enter the bidding process.

Does HUD offer other programs?

If foreclosures are not sold within six months, HUD will sell them for $1 each to approved nonprofit organizations and government agencies. Homes must then be used create housing for families in need or to benefit neighborhoods.