HUD Homes- How To Buy One

Questions on Buying a HUD Home

1. What is a “HUD Home”?

HUD is the US Department of Housing and Urban Development. When someone with a HUD insured mortgage can’t meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then we sell it at market value as quickly as possible.

2. Who can buy a HUD home?

Anyone! If you have the cash or can qualify for a mortgage, you can buy a HUD home.

3. Are HUD Homes meant for people with low incomes?

HUD homes range in price, but most are affordable for low- and moderate-income Americans.

4. Is it true I can get a HUD Home for a dollar?

No. HUD sells homes at market value - that means that the price is set based on the price of similar homes sold in the area.

5. If the HUD Home needs repairs, will HUD make them?

HUD Homes are sold “as-is,” without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up - and not all of them do - 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.

And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs. We encourage you to get the home professionally inspected before you make an offer so you will know what repairs you may have to make BEFORE you submit your bid.

6. How do I buy a HUD home?

Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an “Offer Period.” At the end of the Offer Period, all offers are opened and, basically, the highest reasonable bid is accepted. If the home isn’t sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day.

If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours.

7. If my bid is accepted, then what happens?

Answer: Your real estate agent will help you through the paperwork process. You’ll be given a settlement date, normally within 30-60 days, by which you need to arrange financing and close the sale, or forfeit your earnest money deposit, or pay for an extension of your sales contract.

When you buy a HUD Home, the selling agent’s commission will be paid by HUD but only if you make this a condition of your offer. The listing agent’s commission is always paid by HUD. HUD will pay a total sales commission of up to 6%.

8. How can I get a loan to buy a HUD Home?

HUD doesn’t make loans directly. But there are a number of mortgage programs that could help you buy a home. Contact a HUD approved lender, who will take you through the steps and actually make the loan.

Can I buy a HUD Home as an investment?

Answer: 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.

For more information on HUD home purchases, contact Sondra at sondra@findmemyhouse.com.