Home Buyer FAQs

What exactly is a HUD home?

Certain consumer mortgages are insured by the Federal Housing Administration through the US Department of Housing and Urban Development in order to make home ownership a more affordable and more easily obtained goal for home buyers. If such a loan is defaulted upon by the buyer and the lender is forced to foreclose on the home the FHA pays the outstanding balance on the loan to the lender and the home's title reverts to HUD, who then sells the home at a reasonable market value through special contractors.

How Do Asset Management Contractors Gain access to HUD Homes?

HUD assigns the responsibility for every aspect of the sale of a HUD home to specialist Asset Management Contractors. HUD retains the title on the home until it is officially sold but it is the Asset Management Contractors who handle every other aspect – from marketing and showing to preparing the new home buyer for the closing.

Are HUD homes only Available to Lower Income Buyers?

No. HUD homes are available for any financially qualified person to purchase regardless of race, color, religion, sex, national origin, handicap, or familial status. HUD homes are generally regarded as a good opportunity for a lower income family to secure homeownership, provided they can secure financing though.

When a HUD home first hits the market there is a certain period of time when it can be offered to potential owner occupants. If it is still for sale after that time period is up an investor may purchase it, however the relative of an Asset Management Contractor may not purchase a HUD home.

I am Interested in Buying a HUD home. How Do I Get Started?

The first step is to find a broker who is registered with HUD to sell homes on their behalf. That broker can then help you secure financing approval, show available homes to you, prepare a sales contract and make an electronic bid on the property on your behalf.

Is it Possible to Obtain a List of all the HUD Homes for Sale in my Area?

By using the Search feature on this website you can gain access to information about all the HUD homes that are currently listed for sale in your area.

Does HUD Make Repairs to Damaged Homes Before They are Sold?

Not usually, unless it is necessary to do so to eliminate a major safety concern. HUD homes are sold “as is” with no warranty as to the overall condition. Any known defects are noted in the sales listing though.

How Do I Make an Offer on a HUD Home?

You must have a registered HUD broker make an electronic bid submission on your behalf. If your bid is the highest and is over the minimum acceptable price it will, providing all other conditions are met, be acknowledged. At this point the broker has 2 days to deliver a signed sales contract to the appropriate AM along with a certified earnest money check. It is only when these items are all in hand that the AM will accept the bid on behalf of HUD.

Can I Purchase a HUD home as an Investment?

Priority is given to potential owner occupiers for the initial period of time that the home is on the market. An owner occupier in this case is an individual who has not purchased a HUD home within the last 24 months and plans to live in the property themselves for at least a year. Should no such buyer come forward within a certain period of time the home can then be offered to investors who can buy it to use as a rental property or for resale purposes.

My Agent Has Submitted My Bid on a HUD Home. How Will I Know if it is the Highest?

An AM is required to review bids in an efficient manner and decide upon them in a reasonable time frame. Having your bid acknowledged though does not mean that you have bought the home. This merely gives you the right to have your agent submit a contract package on your behalf with 48 hours of the acknowledgement. The AM will then review that package and if it is accurate and complete only then will they sign it a seller on behalf of HUD and the property becomes contract pending.

Can I Cancel a Bid on a HUD Home?

A bid that has not been reviewed can be canceled by your agent.

If I Sign a Sales Contract on a HUD Home but then Cannot Close on It Will I Lose My Earnest Money?

There is a paragraph in the sales contract – Paragraph 12 – which states that the buyer's earnest money deposit is at risk if the sale is canceled without good cause. This paragraph must be initialed by you before the contract is submitted. There are specific HUD guidelines in place about when a deposit will be forfeited. Ask your agent to provide you with a copy of them – they are contained in an addendum to the HUD-9548 called "Forfeiture of Earnest Money Policy."

My Agent and I Sent in our Contract Package Well Before the 48 Hour Deadline. When Will I know if it was Received and that AM Contractor Has Signed It?

When your agent submits the contract package he or she will use a delivery service that provides them with a tracking number. If the AM finds mistakes in the contract they will send an urgent email to the agent to correct them. A immediate response is required or the contract will be canceled.

If the contract package is complete and error free the AM signs it on behalf of HUD and emails it back to the agent. Once this process is complete the property is considered officially under contract.

What Kind of Home Loan Can I Use to Purchase a HUD Home?

Most common types of home loan can be used to purchase a HUD home, including FHA loans and VA loans (under certain circumstances).

Why Does My Financing Have to Be Pre-Approved Before I Submit a Bid on a HUD Home?

It is an AM's responsibility to secure the best possible price on a home for HUD. To avoid initiating a sale that may not close the AM will require you to submit a financing pre-qualification letter directly from your lender. This letter must include the approved buyer's name, the amount of financing you are approved for and the date it was approved.

Real Estate Agent FAQs

I am a Real Estate Agent. How would I become eligible to sell HUD Homes?

In order to sell HUD homes the designated broker in your organization must hold a current HUD issued Name Address Identifier number (a NAID). Having this number allows all agents associated with the broker to show and submit bids on HUD homes.

To apply for a NAID a broker – not the individual agents - should complete the information on a set of forms known as SAMS (Single Family Acquired Asset Management) forms and submitted to the appropriate local HUD office. Provided the forms are completed properly a NAID number should be issued within 3 to 6 weeks. It must then be renewed on an annual basis.

I am an Agent who is Working with a New Broker but I have Sold HUD Homes in the Past. My New Broker is Not Registered with HUD. Can I Still Use My Old Broker's SSN/FID to Continue to Place Bids?

No. You may only place a bid on a HUD home using the NAID number that belongs to a broker who has legal responsibility for your actions as a real estate agent. If you with to continue selling HUD homes you should have the new broker complete to SAMS forms to apply for their own NAID number.

My Broker has Just Applied for a NAID number. Is There a Temporary Number NAID Number I can Use Until She Gets Her's?

No, temporary NAID numbers are not issued by HUD.

How Do I Obtain the Keys to a HUD Home to Show It?

All HUD homes have showing instructions and lock boxes, just like any other home listed in the MLS.

Can I Stage an Open House at a HUD Home?

No, only a listing broker can stage an open house.

What is a Listing Broker for HUD Homes?

The Neighborhood Listing Broker is a Broker retained by the local AM to list the property in the MLS, provide showing instructions for agents and generally market the HUD homes in their area. They are paid a commission by HUD when and if a HUD home they have listed sells.

If I am Working with an Owner Occupier Buyer Can I Submit Multiple Bids on HUD Homes on Their Behalf?

Yes but it will be the AM contractor that chooses which bid, if any, is successful. The buyer cannot choose so they must be prepared to close on and move into any one of the homes that they bid on.

I Placed a Bid on Behalf of My Client on a HUD Property but a Day Later It is Still Showing as Available. Why is That?

Bids on HUD homes are usually reviewed the morning after a bid deadline has passed and the results are usually not posted until around noon. Often you just need to check again later. Another reason though that the property is still listed as available is that there were no acceptable bids. In this case your client will have to bid again.