HUD Home Bidding Process
Homes owned by Housing and Urban Development, or HUD, are properties that the agency forecloses on after a borrower defaults on an FHA-insured loan. While the bidding process is similar to the protocol for a traditional real estate transaction, there are some guidelines unique to HUD Homes. HUD offers several incentives to sweeten the deal for prospective homeowners.
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Instructions
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Go to the HUDHomestore website. Search available HUD Homes' listings. Filter your results by variables such as county, city, zip code and price range.
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Secure a real estate agent. As the HUD Homes website explains, brokers who are properly registered with HUD can execute HUD Homes' transactions. HUD notes that it pays the agent's commission, up to 5 percent.
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Schedule a professional inspection on HUD Homes you are interested in bidding on. HUD points out that it sells these properties in "as-is condition." The agency is not responsible for repairs before, during or after the sale.
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Place a bid during the initial offer period. You must intend on making the property your sole residence if you wish to bid during this time. After the initial offer period, HUD opens the bidding to all parties, including investors. HUD states that it accepts bid that provide the best return. You can pay cash or use mortgage financing to purchase a HUD Home.
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Request that HUD share in closing costs. HUD notes that it will pay up to 3 percent of the costs of the transaction on some HUD Homes deals.
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Tips & Warnings
If the HUD Home you buy requires considerable work, HUD suggests seeing if you qualify for an FHA 203k Rehabilitation Loan. As opposed to getting two loans--one to buy the property and one to finance the rehab work--this FHA product allows you to secure one loan for both purposes.
