One of the largest sources of foreclosure properties is the Department of Housing and Urban Development (HUD). HUD acquires properties when insured mortgages are not paid. HUD homes are owned directly by the US government and there are specific procedures involved in the marketing and purchasing of these properties. HUD becomes the owner of these properties through foreclosure of mortgages insured by FHA.
HUD lists their available properties through local listing brokers. These agents in turn will place the properties on the local Multiple Listing Service and make them available to buyers. The HUD marketing process is very regimented and not all types of buyers may purchase a HUD home during every phase. On many properties, homeowners (those who would live in the property) are given a first shot at the home. Local non-profits and government entities are also treated with preference.
The HUD listing process works much like a blind auction. The HUD website provides details on when the deadline for bids is and when they will be “opened”. There is not a physical bid opening anymore--everything is done electronically through the Internet. It is important to know when the bid deadline ends and when you can bid. Investors, for example, are often prevented from bidding on new properties for the first seven to thirty days.
The HUD website is called the HUD HomeStore. The website provides a geographic search for properties. Once you drill down to the property record of a specific property, the site gives the buyer significant details that you will want to become familiar. Make sure to notice the listing period deadline, list price and financing details on this page.
Another helpful section on the detail report is under the addendums tab. This section contains details about the HUD contracts and also about the condition issues that HUD is aware of with the property. Click on the PCR tab to access this report. PCR stands for Property Condition Report.
HUD is a good source of REO foreclosures for investors and homeowners. Understanding the HUD process is critical. HUD approved brokers and agents can be found on the HUD HOMESTORE website. Property buyers should partner with a knowledgeable agent to be able to take advantage of all opportunities afforded by HUD.
Have you purchased a HUD home? Please comment below to provide some insight on how the process went for you.