HUD approved Brokers and Realtors are the only licensed real estate agents that can bid on, facilitate, and represent buyers in bidding on HUD Home online auctions. These Brokers/Agents have received the extensive bidding training process required over the years from certified HUD counterparts/ instructors. This training experience is required for successfully bidding on HUD auctions. Moreover, unlike traditional home purchasing, there isn't anyway to otherwise bid on a HUD home property on your own.

When a home-owner with an FHA-insured loan defaults on their mortgage loan, the property is acquired by HUD (the U.S. Department of Housing and Urban Development) at foreclosure. HUD then resells the house to the general public in order to recoup some of the loss incurred by the foreclosure.

Throughout the year, HUD auction off hundreds of their foreclosure properties. and many are purchased at prices far below market value. Some properties need a little TLC others need nothing but the utilities turned on and they're ready to go.

 

Since the listing agent(The agent on the sign at the house) has primary fiduciary duties to the seller HUD (i.e. they are legally obligated to be on the sellers side), it's generally a wise choice to select your own Buyer agent.

Buyers are required to get pre-approved from a bank/mortgage lender before putting in a Bid on a HUD home. Pre-Approval letters are required upfront to be sent in with accepted offer and Ernest monies..

Unfortunately, there isn't a single national database of HUD foreclosure homes. However, your agent has access to all HUD Home Properties currently for auction in your state/city. They can quickly email you all the current HUD properties that fit your request. Moreover, because they are approved agents they have the special needed codes/keys to open these homes for viewing/inspection right away.

HUD foreclosure homes have no occupants, so you will be free to explore the premises. Keep in mind that few HUD foreclosures are turn-key. Some of the properties just need a couple coats of paint, but other may need some serious TLC. All HUD homes are sold as-is.

Once you have access to these HUD foreclosure homes through your agent, you'll want to evaluate the properties quickly. Since HUD foreclosure homes are sold via online auction, you have a limited amount of time to make your decision. Each property will list a bid price and a date that the first bids will be considered. If you know of a home inspector, this would be a good time for them to take a quick look at the property for any major obvious problems. Then if our offer goes into contract with HUD you can order a professional home inspection at that time.

Before the deadline listed on HUD?s auction page, your agent will submit an Electronic HUD foreclosure bid for you. You can bid as an owner-occupant (personally living in the home for twelve months or more), or bid as an investor. On the date specified, your bid will be opened and compared to all other bids that were submitted. The home will go to the highest bidder (assuming that the bid meets HUD?s minimum price requirements).

NOTE: Earnest money deposit is required upfront on all HUD offers.     $500 for <$50k, and $1000 for over >$50k.                

If your bid is accepted/ acknowledged, you have up to 45 days to complete the sale. During this period, you will need to secure financing through a lender. Get started on this right away ? unexpected glitches often arise, and HUD is not required to grant a time extension. It is also recommended that you have a private inspection done on the HUD foreclosure home, to make sure there are not any unexpected problems. To close the sale, you will sign papers at an escrow company's local office.

Current Specials Down Payment Initiative deal with HUD Properties

HUD is offering a $100 Down Payment Initiative. The $100 down payment is for owner occupants purchasing a HUD Home with FHA financing, with full price or higher offers. This incentive is also available to owner occupant purchasers who obtain a FHA Home Repair loan (203K) with a full price offer or higher. If the purchase price is greater than the appraised value, the purchaser must pay the difference between the FHA appraised value and the purchase price in addition to the $100 down payment. It`s a great time to Purchase a HUD Home with FHA financing.

 

It means that HUD allows buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.

Under HUD?s guidelines, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans of up to $8,000. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement. In addition, approved FHA lenders can purchase a home buyer?s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.

These seven steps cover the basics of purchasing HUD homes. Buying a HUD foreclosure property can be very confusing, but rewarding. So, we recommend using an approved and qualified agent to facilitate these somewhat complicated online HUD auction transactions.

We are a full service Texas Real Estate Brokerage.  Approved by HUD and have access to the auction bidding process/forms:

Sales Contract Electronic Filing Addendum HUD-9548

and

Sales Contract Form HUD-9548 Form

Call us today to get your HUD Home process started.

(512)698-4267