How to Buy a HUD Home

You're ready to buy a house, but funds are limited. However, you still have an option: a HUD home. These are residential foreclosures offered by the Department of Housing and Urban Development, or HUD. Buying a HUD home is an alternative for people who can't otherwise afford a home.

Instructions

1. Find HUD properties for sale in your area by checking Internet sites managed by companies under contract to HUD or in your local newspaper. These sites update listings daily.

2. Consult a real estate agent who participates in the HUD program. These agents are knowledgeable in the area of foreclosed homes. Ask them to show you the properties, and decide which one you want to buy.

3. Make sure you have the cash to buy the home, or are eligible for a mortgage. Contact a HUD-approved financial lender and obtain a pre-approval letter, if necessary.

4. Submit a bid for the home during the offer period through your real estate agent. HUD does not deal directly with home buyers; you must have an agent. The agent delivers a sealed bid. HUD usually chooses the highest bidder.

5. Get a home inspection after HUD accepts your bid. Understand that HUD sells homes "as-is" without any warranty, and are often in need of some repairs. HUD homes that need repairs sell for less than market value to reflect the costs buyers must incur to make these repairs.

Tips & Warnings

• HUD homes are at first only offered to owner-occupants. If none of them bid on the homes, HUD then offers them to investors.

• In some areas, HUD offers homes at reduced prices to police officers, teachers, emergency medical technicians and firefighters, as well as nonprofit organizations and some government agencies. The HUD website has details.

• HUD pays real estate agents' commissions. This stipulation must be worded into the contract.

Resources

• Find HUD home listings here.
• Locate listings of foreclosures at the HMBI website.
• Get listings of HUD-participating real estate agents here.