A HUD Home is a foreclosure property owned by the US Government. When a Federally Insured Mortgage goes into foreclosure, the lender can collect on the mortgage insurance and transfer ownership of the foreclosed property to the U.S. Department of Housing and Urban Development. The Department’s nickname is HUD.
HUD Homes are sold on an “as-is” basis. If there are any defects in these properties, HUD will not make repairs.
Who is Allowed to Buy a HUD Home?
HUD homes are offered exclusively to Owner-Occupants, Nonprofits & Government Agencies for 30 days. If an acceptable bid is not received during the first 30 days, daily bidding opens for all bidders on day 31.
How To Place a Bid on a HUD Home
Your online bid must be placed by an agent associated with a HUD Approved Broker. The following four steps must be completed before your bid is submitted:
Sign the HUD Sales Contractand related Disclosure Forms
Bring Earnest Money in the form of a Cashier’s Check payable to HUD
WHAT IS EARNEST MONEY?
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually 1-5% of the purchase price. [For most HUD homes the earnest money amount is $1,000 in the form of a cashier's check or money order payable to HUD.] If your bid is accepted, the earnest money becomes part of your down payment or closing costs. If your bid is rejected, the earnest money will be returned to you. – HUD.gov “100 Questions”