HUD Homes

If you've read about buying a foreclosure, you've probably come across HUD foreclosures. What are these? The Department of Housing and Urban Development (HUD) offers residential foreclosures for sale across the country. But purchasing one of these foreclosures is not quite the same as buying a home from a Realtor or individual seller, so it's important to do some research up front.

What are Federal Government HUD Homes?

HUD foreclosures start as homes purchased with a loan insured by the Federal Housing Administration (FHA). If the home buyer defaults on that loan, the lender files a claim for the balance due, which FHA pays. Then, ownership is transferred to HUD, which sells the property.

These homes are priced at a fair market value for the area, and if the house needs work, the cost will be lower, since the new buyer will have to put out some cash to make the repairs. Remember that like most foreclosures, you purchase a HUD foreclosure "as is." You are solely responsible for making any necessary repairs or improvements.

Finding HUD Homes

Finding HUD home listings is simple. Just follow the links on the HUD website at www.hud.gov to the area where you want to live. Once you find the property or properties you're interested in, you'll need to contact a HUD-approved real estate office to view the property. (These can also be found on the website).

The Bidding Process for HUD Real Estate

If you decide you want to try to purchase one of the properties, you'll have to go through a bidding process. The real estate agent will accept sealed bids for the property, and the highest bid is usually accepted, and that bidder is given a settlement date one to two months from the date the contract is approved. Be aware that your loan is your own responsibility, so you'll want to make sure you've got at least pre-approval for financing before you make a bid on the home.