This page and subpages are for general information on homes and multifamily properties owned by the United States Department of Housing and Urban Development. This information is on properties for sale only; we do not have any information on properties for rent.
What is a HUD home? How does HUD end up owning homes?
In its role of promoting housing, HUD insures mortgages through the Federal Housing Administration (FHA). When someone with an FHA or other HUD-insured mortgage fails to make their payments and can’t make arrangements through housing counseling, the lender may foreclose. If the lender meets the requirements, HUD may take ownership from the lender and then attempt to sell it at market value through the HUD home sales program. HUD also insures multifamily (mostly duplex, triplex and apartment) loans and multifamily properties become available through a similar process. Again, these are homes for sale - not for rent.
Who can buy a HUD home?
Almost anyone who has the cash or can qualify for a mortgage. HUD employees and contractors face certain restrictions.
Are HUD homes cheap? Do they sell for $1?
HUD attempts to sell homes for market value. In my experience they typically start their homes out above market price. After a certain time on market they will begin reducing price, often by large amounts. At that point bargains often become available. HUD does not sell homes for $1 to the public. They do have a program to sell homes for a nominal amount, often $1, to local governments and non-profit organizations for uses such as community centers. These sales are then reported in HUD statistics and local public records. This is likely the source of the “$1 government home” rumors.
How can I buy a HUD Home?
You’ll need to find a local real estate agent who is registered with HUD to submit your bid. Although HUD’s Management and Marketing Contractor makes a list of properties available to the public, bidding can only be done through a licensed and registered real estate agent.
Need help finding a HUD registered agent?
To make a bid, you will be required by HUD to provide an earnest money deposit of at least $1,000 (more for higher priced properties) in the form of a cashier’s check made out to the Department of HUD. [This is a HUD requirement. Real estate agents are prohibited by HUD from submitting your offer without this cashier’s check on pain of loss of HUD registration. If your cashier’s check is dated after your offer, HUD will not sign the contract and your agent could lose his registration.]
If you are getting a mortgage, you also need to have a preapproval letter in hand prior to making a bid. If your financing does not go through and you did not have a preapproval prior to placing your bid, you will forfeit 100% of your earnest money deposit per HUD policy.
How do bid periods work?
Normally, HUD Homes are sold in an “Offer Period.” At the end of the Offer Period, all offers are opened at the same and the highest reasonable bid is accepted, if an acceptable bid is received. If the home isn’t sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. Bids are opened the following business day with all bids from the previous day opened at the same time. If your bid is acceptable to HUD, your real estate agent will be notified, usually within 48 hours.
What happens if my bid is accepted?
You’ll be given a settlement date, normally within 30-60 days, by which you need to arrange financing and close the sale. Failure to close by that date for any reason including delays in financing will mean that you forfeit your earnest money deposit. If an extension is required, HUD may approve one at its sole discretion and may charge a fee for the extension. Your only option in that case is to pay the fee for the extension or forfeit your earnest money deposit.
Does HUD pay the agent’s commission?
Only if it is in the offer. When you buy a HUD Home, the selling agent’s commission will be paid by HUD but only if you make this a condition of your offer. The listing agent’s commission is always paid by HUD. HUD will pay a total sales commission of up to 6%.
Does HUD finance it’s properties for sale?
No, HUD does not make direct loans. Some properties will qualify for an FHA insured mortgage, while others will qualify for an FHA 203(k) mortgage or “rehab loan”.
Does HUD make repairs?
HUD homes are sold “as-is, where-is, with all faults” and with no disclosures, warranties or repairs. The sale is “as-is” as of the time of the offer - all inspections must be completed prior to submitting your offer. HUD homes will not have utilities on, so it is necessary that any inspectors be prepared for this, possibly providing generators, pressure testing equipment for plumbing, etc. HUD will make no repairs and withdrawing after an offer due to an inspection will require forfeiture of earnest money.
Can I buy a HUD home for investment?
Yes and no. HUD homes are offered first to owner-occupants only. If properties don’t sell to owner occupants during this “priority period” they become available to all purchasers. Important note for investors: HUD does follow up audits to make sure the purchaser is living in the home and it is considered fraud, with both civil and criminal penalties, to claim you are an owner-occupant purchaser and then use the property for investment.
