What’s a HUD Home?
A HUD home is a 1-4 unit residential home that is owned by the government. More specifically, it means the Federal Housing and Urban Development paid off an FHA (government insured) loan that a homeowner defaulted on. HUD then lists the home for sale publicly to recover the losses on the foreclosure claim.
Things to know about HUD Homes:
Who is eligible to buy a HUD home?
If you can qualify for a loan you can purchase a HUD home! The best part is, HUD homes are always offered to owner occupants first. This means the typical home buyer won’t have to compete with investors for a specified time period immediately after being listed for sale.
HUD does not offer financing or loans so you will have to secure financing prior to making an offer. The good news is there are FHA 203K loans available for those that qualify. This means you can borrow the money needed to purchase a home in need of repair AND the money needed for those repairs!
How to buy a HUD home.
You must work with a HUD registered real estate broker. No one else will be able to bid on a HUD home on your behalf. Buying HUD homes is different than regular real estate transaction as all bids are put through online. You also need to be approved for financing before you can submit a bid and if you win, a $1,000 earnest money deposit is required.
I’m very familiar with HUD homes. This house was a home I flipped back in summer of 2012 and the home we currently own was a HUD home!
My most recent experience with purchasing a HUD home was not the greatest. I know I said in this post that I would never buy a HUD home again… But I’m kidding myself. You can find some reallllly amazing deals on HUD homes, especially if you plan to live in the home! Even if you want to invest, once the initial “homeowner only offer period” it’s free game and you can often find a deal that is too good to pass up.
HUD favors homeowners over investors. Like I said They support home-ownership
So when asked if someone should buy a HUD home my answer is 100% yes! Just be warned that sometimes things don’t go smoothly (but that can happen with any real estate transaction, right?)