Buying a HUD Owned Property
We have sold Hundreds of HUD Homes over the years, studied the bidding process and results, and
have employed that accumulated knowledge to become one of the most successful bidders among all
HUD approved Brokers. We will do the same for you and have you in "Your New Home" sooner than
you might think with the least amount of effort. If you currently have any Credit Problems or Credit
Glitches, we will work with you directly to solve those problems to achieve a Higher Credit Score to
get you qualified for the Best Loan Possible, absolutely FREE. We are here to walk you through the
entire process. But you must take the first step and give us a
Call at 951-440-9729
We have provided the list below to answer some of your questions about these Great Homes,
and the Process of Making an Offer.
The U.S. Department of Housing and Urban Development (HUD) is the agency that oversees federal housing agencies and programs including the Federal Housing Administration (FHA) which insures home loans. A HUD Home is a one-to-four unit single-family residence, condominium or townhouse that has been conveyed to HUD by the lender as a result of foreclosure when the borrower defaults on the FHA-insured loan. HUD in turn sells the property at “AS IS” market value based on a recent appraisal as quickly as possible through an Asset Manager (AM) Contractor such as PEMCO, LTD. HUD Homes vary in price, location, and condition. Some are move-in ready condition and others are not.
Anyone with a valid Tax ID (*SSN or Employer Federal Tax ID) issued in the United States can buy a HUD home. Potential buyers must qualify for a mortgage or pay cash to buy a HUD home. Buyers must have a pre-qualification letter from a certified lender, or proof of funds in the amount of, or greater than the gross purchase price of the property.
HUD homes are listed on the HUDHomestore web site and in the local Multiple Listing Service (MLS).
All buyers MUST be accompanied by a broker or agent when viewing any HUD Home listed for sale. Brokers and agents must also accompany any individual performing services such as home inspections, appraisals, or certifications.
Yes, please contact a registered HUD broker or agent to place a bid on a property and to access the home listed for sale.
Yes, there are owner-occupant priority bidding periods set aside throughout the bid process.
Exclusive Listing Period – IN and IE
Exclusive Listing Period - UI
· There is 5 day exclusive listing period for owner occupants for UI (uninsured) properties.
During the exclusive listing periods, bids may be submitted by Owner Occupants. At the conclusion of these exclusive listing priority periods, all general public bids will be accepted.
All HUD Homes are sold “AS-IS”. HUD makes no representations or warranties concerning the condition of the property, including but not limited to mechanical systems, dry basement, foundation, structural, or compliance with codes, zoning or building requirements and will make no repairs to the property. Regardless of whether the property is being financed with an FHA insured mortgage, HUD does not guarantee or warrant that the property is free of visible or hidden defects, termite damage, lead based paint, or any other condition that may render the property uninhabitable or otherwise un-useable. The purchaser is responsible for taking such actions as they believe necessary to satisfy themselves that the property is in a condition acceptable to them, of laws, regulations and ordinances affecting the property and agrees to accept the property in the condition at the time of contract acceptance. Purchasers are strongly encouraged to have a home inspection performed to identify any possible defects.
This report is available on the HUDHomestore under the addendums tab; it is provided to assist the purchaser in assessing the condition of the property. It is NOT in any way a guarantee or warrant that the property is free of visible or hidden defects. All purchasers are strongly urged to complete a full property inspection with the utilities activated to identify the current condition of the property and any repairs that may need to be completed.
Any licensed real estate broker registered with HUD, or an agent employed by a registered broker, may show and submit bids on behalf of purchasers.
There are five buyer types that are eligible to purchase HUD Homes: Owner Occupants, Investors, Good Neighbor Next Door (GNND), Eligible Nonprofit organizations, and Approved Government Entities.
· Owner Occupant buyers are individuals with a valid Social Security Number (SSN) who have not purchased a HUD property within the past two years as an owner occupant. An owner occupant must live in the property as their primary residence for one year and may not purchase another HUD Home for two years. Owner Occupants can bid on homes in the exclusive or extended periods.
· Investor buyers are individuals with a valid SSN or Employer Identification Number (EIN) who purchase the property as an investment. Investors can bid on homes in the extended listing phase. There is no restriction on how many properties an investor may purchase.
· GNND buyers are qualifying law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians. HUD offers a discount of 50% from the list price of a home located in revitalization areas and in return GNND participants must commit to live in the property for at least 36 months as their sole residence. HUD also requires that buyers sign a second mortgage and note for the discount amount. The GNND buyer or spouse may not have owned a property within the last 12 months, or have participated in the GNND program before. A GNND buyer must bid 100% of the listing price. GNND buyers can use any type of financing or cash deal. FHA financing: a GNND buyer must qualify for the entire purchase price prior to discount. The buyer can finance into the mortgage all reasonable and customary closing costs, including any prepaid Taxes, Homeowner's Insurance, and Real Estate commissions. HUD will NOT pay any closing costs or real estate commissions. GNND participants must submit bids through a real estate broker licensed to do business in the state where the property is located. If using FHA financing to purchase the home, GNND buyers can purchase the home for only $100 down. FHA financing must be used for the $100 down payment incentive to apply.
· Approved Nonprofit Organizations can bid on homes in lottery, exclusive, and extended phases provided the properties are located in approved purchase areas. If the property is in the lottery phase, the home must be uninsured. Non-profits rank below Government Entities in the bid selection process for the lottery, but above them for exclusive and extended listings.
· Approved Government Entities can bid on homes in lottery, exclusive, and extended phases provided they are in approved purchase areas. If the property is in the lottery phase, the home must be uninsured. Only Government entities can bid on Dollar homes.
Properties are listed daily (Sunday to Saturday).
There are 4 listing periods: Lottery, Exclusive, Extended, and Dollar Homes.
Properties that are eligible under HUD Special Programs are first offered to GNND and HUD approved Non-profits and Government entities by Lottery. Eligible properties located in HUD designated Revitalization Areas and uninsurable properties located in approved purchase areas of an approved nonprofit or government entity are listed for sale for a period of seven (7) calendar days (the Lottery Period).
· Insured Single Unit Properties within a Revitalization Area - Only bids from GNND participants may be accepted.
· Uninsured Single Unit Properties within a Revitalization Area - Only bids from GNND participants, qualified nonprofit organizations and government entities whose approved purchase area covers the location of the property, may be accepted. In the event of competing bids from the aforementioned groups, the order of preference is as follows: (1) potential GNND Program participants; (2) government entities; (3) qualified nonprofit organizations.
· Uninsured Multi-unit properties within a Revitalization Area - Only bids from approved nonprofit organizations and government entities whose approved purchase area covers the location of the property may be accepted.
· Uninsured Properties in a non-Revitalization Area - Only bids from approved nonprofit organizations and government entities whose approved purchase area covers the location of the property may be accepted.
· Unsold insured (I) and insured with escrow (IE) lottery properties enters a ten (10) day owner occupant Exclusive Listing period. All bids received during this period are treated as having been received simultaneously and if no winning bid is received by the 10th day, the property will be extended to all buyers.
· Unsold uninsured (UI) lottery properties enters a five (5) day owner occupant Exclusive Listing period. All bids received during this period are treated as having been received simultaneously and if no winning bid is received by the 5th day, the property will be extended to all buyers.
The exclusive listing period is reserved for Owner Occupant bidders, qualified nonprofit organizations and government entities and may vary depending on the property's insurability.
Exclusive Listing Period – IN and IE
· There is a 30 day exclusive listing period for owner occupants for IN (insured) and IE (insured with escrow) properties. All bids received in the first 10 days are treated as having been received simultaneously and if no winning bid is received by the 10th day, the bids are reviewed daily for the remainder of the exclusive listing period (up to 20 days) for owner occupant purchasers only.
Exclusive Listing Period - UI
· There is 5 day exclusive listing period for owner occupants for UI (uninsured) properties. All bids received in the first 5 days are treated as having been received simultaneously and if no winning bid is received by the 5th day, the property is made available to all bidders.
· Properties that are insurable (I) or insurable with escrow (IE) that were not sold in the Exclusive Listing Period are open to ALL bidders in the Extended Listing Period, starting on the 31 st day. All bids received on the same day are treated as having been received simultaneously and are opened daily at the end of each business day.
· Properties that are uninsured (UI) that were not sold in the Exclusive Listing Period are open to ALL bidders in the Extended Listing Period, starting on the 6th day. All bids received on the same day are treated as having been received simultaneously.
These are listing codes, finance types that describe the FHA insurability of a property.
It remains the responsibility of the bidder's Broker/Agent to monitor and review the status of all submitted bids on HUDHomestore.com.
If your purchaser is obtaining FHA financing you will be required to use HUD's FHA “AS-IS” Appraisal (unless HUD's Appraisal is over 6 months old at the time of contract “Acceptance”). In this case, your purchaser will be required to obtain a new FHA “AS-IS” appraisal at their expense. If you bid in excess of the appraised value, the purchaser must pay the difference between bid amount and appraised value in cash. This is because FHA will not insure a loan for greater than the appraised value of the property.
Open: The bid has been submitted and is awaiting review by the Asset Manager. The bidder can modify or withdraw their bid.
Accepted: The bid has been accepted by the Asset Manager.
Withdrawn: The purchaser or their bidder has withdrawn the bid, and it is no longer under consideration by HUD.
Cancelled: The bid has been cancelled.
Under Review: The bid has been opened and is being reviewed by the Asset Manager.
If your offer has been accepted, your Broker is required to deliver the signed sales contract and all addenda to us within two (2) business days after bid acceptance. The successful bidder's Broker must submit a complete sales package by OVERNIGHT MAIL to the designated Asset Manager. EVERY DOCUMENT necessary to consummate the transaction must be completely signed in BLUE ink, sealed and delivered, along with the earnest money deposit check within 2 business days from award notification.
· Sales Contract - HUD Form 9548 and certification of broker form.
· Addendums : Lead Based Paint (if applicable), Radon & Mold Disclosure, Earnest Money, Forfeiture and Extension Policy, Get a Home Inspection Notice, Owner Occupancy form (if applicable)
· A Pre-Qualification letter from a certified, licensed lender is a requirement on all sales containing a mortgage contingency. For cash sale, verification of availability of funds (copy of bank statement, etc.)
· Earnest Money Check (original funds)
Note: Additional forms may be required depending on what state the property is located in, please go to our “forms” tab.
Yes, your Broker can cancel an offer after it has been submitted, until the bid opening date. You will not be able to cancel an offer after the bid opening date has passed.
In the event that there is more than one acceptable bid received, the Asset Manager will award to the highest net bidder and hold back-up offers.
The FHA appraiser lists the estimated cost of repairs needed to bring the property up to minimum FHA standards. This amount is then multiplied by 110% and this amount is listed as the repair escrow amount. Example: if repairs total $1,000 x 110% = $1,100. The Repair Escrow amount will be listed at $1,100. Repair escrow ONLY applies to FHA financing – not cash or conventional transactions.
The DE Underwriter (FHA Direct Endorsement Underwriter) will determine the final 203(b) mortgage amount. The DE Underwriter will take into account the repair escrow amount to determine the FHA loan amount. The DE underwriter will determine this amount. Regardless of whether or not a repair escrow will be used in the purchase of a home, the lines on the Sales Contract that request the down payment amount and the secured mortgage amount should be filled in "TBD" (To Be Determined). The line associated with the length of the loan should also be filled in TBD. Please remember that the repair escrow amount needs to be filled in only if the buyer is using 203(b) repair escrow financing.
HUD will pay up to 3% of the Buyer's Closing Cost and up to 3% Commission to