Home Home Buying Process

HUD is the U.S Department of Housing and Urban Development. HUD acquires 1-4 unit residential properties as a result of a foreclosure action on an FHA-Insured mortgage. HUD then becomes the property owner and offers the home for sale to recover the loss on the foreclosure claim.

HUD utilizes Asset Managers to market and manage HUD-owned properties. The Asset Managers then distribute listings to the listing brokers local to each specific HUD home to be listed for sale. The Field Service Manager is the HUD Contractor responsible for property maintenance and preservation services such as inspecting the property, securing the property, cosmetic enhancements and repairs and providing ongoing maintenance until the home is sold.

Those interested in purchasing a HUD Home will need a realtor to assist them with the purchasing process. Buyers should choose a local broker who is registered to bid with HUD. The selling agent and the listing agent may receive up to 3% commission based on the sales price of the property.  At the beginning of the bidding process, there is an initial period set aside to give potential owner-occupants priority bidding opportunities. An owner-occupant is someone who is buying the home as their primary residence. If the property goes unsold during this initial bidding process, the home becomes available to all buyers, including investors.

All bids need to be submitted via www.HUDHomestore.com by a broker who is registered to bid with HUD. After searching the properties and finding the property you would like to place a bid on, click the HUD Registered Bidder tab in the lower right hand corner and follow the instructions. HUD does not offer financing for homes, so buyers will need to contact a lender or mortgage broker unless they will be paying with cash. Buyers may use FHA or conventional financing to purchase a HUD home. Once a bid has been accepted, the buyer will then need to present an earnest money deposit. Buyers make an earnest money deposit to show that they are serious about wanting to complete the purchase. If the seller (HUD) accepts the offer, the earnest money deposit is held in an escrow account by the real estate broker or by a closing agent until closing. The funds are then applied to the buyer’s portion of the remaining costs. If the offer is rejected, the earnest money deposit is usually returned since no binding contract has been entered into. If the buyer retracts the offer and/or does not fulfill its obligations under the contract, the earnest money is forfeited.

After a contract is accepted and signed by HUD, the buyer has a 15-day time frame to complete a professional home inspection to see if there are any substantial property deficiencies not disclosed to the buyer through the Property Condition Report. 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 all needed repairs, all purchasers are strongly encouraged to get home inspection from a licensed professional. Buyers are also encouraged to perform a walk through inspection at or near the date of your contract acceptance and again immediately prior to closing. The buyer assumes full responsibility for the property and its condition on the date of closing. HUD will make no settlement for damages reported to HID after the close of escrow.


For more information on HUD Homes including who to contact to report damage, searching for properties that are currently available and information on programs offered by HUD, please visit www.HUDHomeStore.com