How to Bid on a HUD Home

The Department of Housing and Urban Development sells foreclosed residential units purchased with a Federal Housing Administration-insured mortgage. HUD puts the homes on the market at a reduced price in an attempt to recover the losses associated with an FHA foreclosure. Potential bidder can find a list of HUD homes on HUD's website (hud.gov). Any person can bid on a HUD home, provided they have the required funds and credit.

Instructions

1. Access the HUD home store (hudhomestore.com) to view available homes. Enter the state and provide any additional information about the area of interest. Click on the picture to view property information. Read the listing information to see property listing date, list period and price. Pay special attention to the deadline date. This is the bidding end date. You may also contact a local realty agent to inquire about HUD homes in your area.

2. Check to see if the home is 203k eligible. The 203k program provides rehabilitation funds to homeowners. Homeowners use this money to make repairs or update single-family homes. Some homes have a "Repair Escrow" amount for repairs that cost less than $5,000.

3. Click the "Addendums" to see additional information regarding down payments, agreements and reports pertaining to the home. Make sure to read each items under the heading labeled "Addendums."

4. Click on "Agent Info" and write down the name of listing brokers. These individuals help you place your bid. You cannot bid on the home yourself. A licensed broker or the listing broker must submit your bid.

5. Obtain financing for the home. You can use your personal funds or apply for financing through a mortgage lender. You may qualify for a 203(b) Mortgage Insurance loan. You must meet Federal Housing Administration credit guidelines and choose a one- to four-unit structure. If approved, you will receive 96.5 percent of the cost with the option to finance the upfront mortgage insurance premium into your mortgage.

6. Obtain a professional home inspection before submitting a bid for the home. If satisfied, submit your bid through your broker. According to RealtyTrac, HUD places high priority on offers received from owner-occupants in the first 10 days of the bidding period. Owner-occupant refers to buyers who purchase the home as the primary residence. Escrow takes place within 30 to 60 days of offer acceptance.

References

• Department of Housing and Urban Development: Buying HUD Homes
• Department of Housing and Urban Development: HUD Home Store
• Department of Housing and Urban Development: Rehab a Home w/HUD's 203 (k)
• Department of Housing and Urban Development: Glossary of HUD Homes Listing Codes
• Department of Housing and Urban Development: HUD Homestore FAQs: Can I Bid on Homes Myself?
• Department of Housing and Urban Development: 203 (b) Mortgage Insurance

Resources

• RealtyTrac: How Can I Buy HUD Home Foreclosures?