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What is a HUD Home?

A HUD home is a home that was financed with a FHA insured mortgage and the owner fails to make the payments. The lender then forecloses on the home; HUD pays the lender; and HUD takes ownership of the home (and markets for sale).

Who can buy a HUD Home?

Any approved buyer who qualifies for a mortgage can buy a HUD home.

How can I find out what HUD homes are for sale?

Potential buyers may search for HUD homes on HUD’s website www.hud.gov , or HomeSource’s www.hudhomestore.com.

How do I buy a HUD home?

An individual interested in purchasing a HUD home should contact a real estate agent and/or broker who are certified with HUD to sell HUD homes. Once the purchaser has chosen the real estate agent and/or broker, the purchaser's Agent may place bids on properties.

Can I get a loan to buy a HUD home?

Yes any purchaser that can qualify for a mortgage loan can purchase a HUD home.

When is the date of the next auction of homes?

As of today no auctions are scheduled.

How can I submit a bid?

A buyer can contact any HUD registered and licensed real estate agent and request that they submit a bid. Make sure your real estate agent and/or broker has a valid NAID number before engaging them to submit a bid on the buyer’s behalf. Also inquire if they have keys to allow a visit to the home.

If my bid is accepted, then what happens?

You can view the winners on the website under bid results. HomeSource will also attempt to notify the real estate agent and/or broker by fax of acceptance of the potential purchaser’s bid, the original contract paperwork must be received within 48 hours. Once the paperwork is received it will be reviewed for accuracy, and ratified. Once the contract has been ratified it is set for closing.

Can I submit bids on multiple properties?

Yes, a buyer may submit bids on multiple properties. Investors will be required to close on multiple properties if they are the successful bidder. Owner Occupant bidders will be awarded one property.

Can I cancel my bid?

A buyer may submit a notice of cancellation before or after the bid is accepted. The buyer can also not submit their contract and/ or fail to submit pertinent financial information in which would result in a cancellation of the bid.

Can I buy a HUD home as an investment?  When can an investor submit a bid?

Once the o/o-owner occupant priority period has expired HUD properties are then released into the open market at which time investors are able to submit bids to purchase the property. Please note that the priority period is granted with the attempt that owner occupancy will occur. To bid as an investor the website priority will say All Bidders.

What is Owner Occupant Period?

The Owner Occupant period is delegated to the first 10 days the property is listed and extended for Insurable properties. All owner-occupant offers received are reviewed and the property is awarded to the highest acceptable net owner-occupant bidder. At the conclusion of the 10-day Owner Occupant priority period if the property remains unsold, UI-Uninsurable bids from investor purchasers will be considered. If the property is IN-Insured or IE-Insured with escrow it will remain on the website for Owner Occupants for an additional time.  

How do I choose my closing agent?

On HomeSource’s website there is a list of all the HUD Closing Agents for each area. Each closing agent is a HUD contractor who follows the requirements they have been given by HUD for closing these sales. They are paid by HUD for document preparation and closing services. You may use a different closing agent, but then you must pay these fees. For HomeSource’s area there are two closing agents based upon the property’s location either Lawyer's Advantage (Maryland)  or Legacy Title & Escrow, Inc. (D.C.) will be assigned.

Does HUD help with closing costs and Selling Agent’s Commission?

HUD will cover allowable closing costs and the selling agent’s commission based upon a scale that is already in place.

How can I see the inside of a property?

A Real Estate agent must grant you access to the property.

How do I get keys to HUD homes?

Only licensed Real Estate agents may have a free set of keys to HUD homes. Keys are available at the M & M contractor’s office. You must be a licensed Real Estate Agent in Maryland and/or the District of Columbia to receive keys. Most HUD homes that are available for sale are on lockbox for Realtors to achieve easy access. If the home is not on lockbox or CSS you must obtain a free set of HUD Keys.

When should I do a walk through inspection?

Once the bid is accepted and the contract has been ratified the buyer may do a home inspection. 24-48 hours prior to settlement the buyer is urged to complete a final walk through of the property prior to settlement.

If the HUD Home needs repairs, will HUD make them?

No. HUD homes are sold in “as-is” condition, with out warranty. However, if the purchaser wants to borrow the funds to fix up the home, this is possible under certain conditions.

What is the 203 K program?

It is FHA’s rehabilitation and repair of a single family home program. Lenders work with FHA as well as purchasers to make financing easier and more affordable for the buyer to purchase the home and make the repairs necessary. The loan granted to the buyer will exceed the price offered for the home which will account for the amount needed to make repairs. The lender will use the projected escrow to account for the repair costs and the amount of the loan.

What is the repair with Escrow Program?

The “Repair with Escrow” program covers homes that can be sold using FHA financing as long as the repairs are done to the property, after settlement, which will be paid for out of the escrow account held by the closing agent. The escrow amount us predetermined prior to listing and noted in the advertisement for sale. These items included in the repair escrow are item that must be completed for the property to meet the minimum FHA standards. The escrow is financed by the purchaser over and above the offer price.

What does it mean when a property is “insured, “uninsured”, “insured with Escrow”?

Insured property- a property that is both eligible and qualifies for FHA-insured financing in its current condition.

Uninsured property- a property which has in excess of $5,000 in minimum property standards repairs needed and does not qualify for a FHA loan in its current condition, unless, the buyer is using the 203 K program.

Insured with Escrow – is a FHA loan issued for a property that has less than $5000 in repairs needed to meet minimum property standard. Minimum property standards are defined as items that affect the habitability of the home. The buyer must finance the escrow established and fix the identified repairs needed for the property within a certain timeframe from purchasing (taking ownership) the property.

These products are only applicable on a property being purchased using a FHA mortgage.
(In all cases conventional loans and cash can be used to finance these properties.)