HUD provides NO warranty as to the condition of its properties and will not pay for the repairs. A. 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. If sold directly, HUD will generally place ads in newspapers, rather than place individuals on mailing lists for their single-family homes. If HUD accepts your bid, they will notify your agent by email and give your agent instructions on how to send the paperwork to HUD. Dealing with HUD is different and takes a lot of patience, but it was worth it for me.
HUD homes are sold through an auction process; once the deadline is past and bids are in, HUD reviews its options. When HUD homes are first listed there is a bid period for owner occupants, non-profits or government agencies. Every bit of information that I was handed down by multiple sources closest to HUD turned out to be unequivocally true. However, this template is used by EVERY asset company managing and selling HUD homes.
In reality, HUD is the administrative agency that oversees, and is responsible for, a number of federal housing agencies and programs including the Federal Housing Administration (FHA) which insures home loans in specific qualifying areas of the country from default. Approved Nonprofit Organizations can bid on homes in lottery, exclusive, and extended phases provided the properties are located in approved purchase areas.
Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf at HUD pays the real estate broker’s commission, if included in the contract. Unfortunately most Realtors don’t have a broad knowledge of bidding on REO ‘s, HUD ‘s or distressed property. A realtor with experience investing and improving HUD foreclosures would be ideal.
A second lesson from the rebuilding process following Hurricanes Katrina and Rita is that rental properties were rebuilt more slowly than owner-occupied homes. Another bonus for home buyers is that HUD gives preference to owner-occupants who intend to live in the home for at least one year, so odds are good you’ll beat out investors to boot! HUD will list some properties differently depending on the repairs needed and potential buyers qualifications. Some HUD homes are even move-in ready, so never presume you’ll end up with a clunker; you could luck out!