How to Bid on a HUD House

U.S. Department of Housing and Urban Development (HUD) homes are available throughout the United States. HUD homes can be sold without a minimum bid. HUD homes often provide a means for families with a limited income to repair a home and then occupy it at a cost lower than market value. If you are interested in purchasing a home from the Department of Housing and Urban Development, you need to know what steps to take to bid on a HUD house.

Instructions

1. Find a real estate agent who has approval from HUD and ask to see HUD homes in the area. Meet with the real estate agent to discuss what you are looking for in a house. HUD does not deal directly with individuals and only accepts bids from qualified agents.

2. Get prequalified and determine how much money you can spend on a HUD house. Make sure that you can afford the home and that you can make the down payment. Ensure that you have the cash to purchase a home and may be eligible for a mortgage.

3. Find a home that you like and do homework on the available homes in your region. Get an idea of what the homes are selling for in the area.

4. Check to see when HUD auctions are held in your community. Most cities hold auctions once or twice per month.

5. Submit a bid via your real estate agent. The HUD-approved agent can help you complete your bidding form. Depending on the status of the home, your bid may be sealed during the bidding process. Your bid will only be available for viewing by the HUD officials on the day of the auction. Your bid should include a deposit or earnest money. The amount of deposit amount will vary based on the region. Your HUD real estate agent should give you the amount of the deposit to make with your bid.

6. Wait for notification regarding your bid. If you have successfully made your bid, you are given about 30 to 45 days to arrange the financing. Securing approval for financing before the event can help you close on your house more quickly.

7. Get a home inspection once HUD accepts your bid. Most HUD homes are only sold as-is and often need extensive repairs, which may need to be made before you move in or even at closing, depending on the state of the home. Keep in mind that when HUD homes need repairs, they will sell for less than market value for buyers to recoup the costs involved in making the repairs.

Tips & Warnings

• HUD homes are first offered to qualified buyers who will occupy the home. If a qualified buyer fails to bid on the home, then HUD will sell the property to investors.

• HUD pays real estate agent commission costs most of the time. Check to see if this is stipulated in your contract.

• Do not try to contact HUD during the bid review process. This will not further the review of your bid.

References

• U.S. Department of Housing and Urban Development :Buying a Home