Showing a HUD Home?

Selling Agent's Broker must be registered with HUD in order to show, bid, and sell HUD homes. Your broker must register to become a HUD Registered Selling Broker (This is shown in one of the instructional videos under HUD updates).

What is a HUD home?

A HUD home is a residential property acquired by HUD as a result of a foreclosure on an FHA insured mortgage. HUD pays the lender and takes ownership of the property, then offers it for sale to the public in order to recover the loss.

Who Can Buy a HUD HOME?

Any approved buyer who has the cash or can qualify for a mortgage (subject to certain restrictions) may buy a HUD home. HUD homes are initially offered to owner-occupant purchasers (purchasers who are buying the home as their primary residence). After the priority period for owner occupants expires, unsold properties are available to all buyers, ,including investors.

Should I get a Home Inspection?

All HUD homes are sold "AS IS" and without warranty. HUD will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential home buyer to get a professional inspection.

Before HUD homes are listed for bidding, HUD order an appraisal and inspection on each property. What does it mean when a HUD home is "IN" (or Insured), "IE" (or Insured with Repair Escrow), and "UI" (or Uninsured)?

Insured (IN)- Means the condition of the property meets HUD minimum standard and no repairs are required to acquire an FHA loan. An FHA mortgage is the preferred loan for a HUD property to avoid further repair scrutiny. Buyers using a VA loan or Conventional loan run the risk of appraisal conditions. Cash is also acceptable for this classification of property. Insured homes do not typically sell at a large discount from market price.

Insured with a Repair Escrow (IE)- If a HUD homes doesn't meet the minimum HUD standards as set for an FHA loan, then a repair escrow is needed. These Minimum Property Standards affect the habitability of the home. The buyer must accept the repair escrow in order to fix items required by FHA if doing an FHA loan.

The repair escrow is an account established by the lender at settlement for the funds required to do the repairs, usually with an added 10% cushion added. This amount is not a gift, it is added to the borrowers loan and repaid as part of that mortgage. Repair escrows range from $1-$5,000. The borrower doesn't have to qualify for this additional amount.

Uninsured (UI)- A HUD home that required more than $5,000 in repairs falls into this category. The best loan for this is a FHA 203K rehab loan. Uninsured properties are available to investors after 10 days.

How long is the Owner Occupant exclusive bidding period?

For IN and IE properties, the owner occupant period is for 30 days from the original listing date. This will be a simultaneous bid for days 1-10, and those bids entered during those first 10 days will be reviewed on the 11th day. If there isn't an acceptable bid that meets HUD financial minimum, then the property will remain on the market on a daily bid opening until it is sold.

For UI properties, the owner occupant period is just the first 5 days. Then, this classification will be open to all bidders on a daily bid opening. Any exceptions to this rule will be listed for each property at www.hud.gov/hudhomes.

WHEN Will I KNOW IF MY OFFER IS ACCEPTED?

All HUD homes require a minimum period that the home must be listed before HUD reviews offers. This does not include weekends or holidays, so if the deadline day falls on weekend or holiday, then the announcement of a bid acceptance via email will be the first business day following the deadline day. If the property is still showing up on HUD website, the HUD has not yet accepted an offer. If the property is not longer showing up on HUD website and you have not received notification, then HUD has likely accepted another offer. You will not receive notification if you offer is not accepted. If HUD accepts your offer, then you will receive an email acceptance with further instructions for submitting your hard copy contract.