What Is A HUD Home?

Who is Eligible to Buy a HUD Home?

The HUDHomeStore  is the listing site for HUD real estate owned (REO) single-family homes and 1-4 Unit Multifamily properties. This site provides the public, brokers, potential owner-occupants, state and local governments and nonprofit organizations a centralized location to search the inventory of HUD properties for sale.

Since the FHA has guaranteed the loan on behalf of the federal government, when the foreclosure process is completed, FHA pays off the lender of record and it goes back to HUD as the responsible party for all FHA insured loans. HUD homes are then put for sale at the current market rate with the aim of selling it off quickly and recovering the money. It in fact offers a good option for those looking to buy HUD homes. There are many programs for discounted purchases (these will be covered in another article.)

HUD will sell the property using a HUD broker though a bidding process.

In order to buy HUD homes, one can purchase only through real estate agents approved by the U.S. Department of Housing and Urban Development. Approved agents can submit bids on behalf of the buyer

Owner occupants rank above nonprofits and government agencies in the bid-selection process for Exclusive and Extended listings. During the first 30 days that a FHA foreclosure is listed for sale, only owner-occupants are permitted to place bids; if a successful bid is not accepted by the time the initial priority period has elapsed, bidding is opened to investors.

Home buyers are motivated to buy HUD homes because they are listed at or below market value and it offers them the opportunity to purchase a home than they might not normally be able to purchase.

HUD does not provide home loans directly to buyers; you need to negotiate your loan with a lender or bank of your choice. Buyers must have a letter of pre-approval from a mortgage lender or cash with proof of funds.

The agent will be notified within 48 hours of an accepted bid. The settlement or escrow stage is usually completed within one to two months, during which time financing is arranged and the sale is closed. As in the case of a normal real estate transaction, if you do not close by the 55-Inspectingsettlement date, your earnest money deposit is forfeited or you will have to pay a per Diem fee until the close of the sale.

The Federal Housing Administration does not guarantee the condition of its properties and will not pay for the correction of defects. Because the new owner will be responsible for making needed repairs, HUD strongly urges every potential home buyer to get a professional inspection prior to submitting an offer.

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