Many people ask what is a HUD Home and how it becomes one, so I thought I’d take a few minutes to explain. A “HUD Home” is defined by The Department Of Housing And Urban Development (HUD) as “a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.” Basically, this means someone bought a home using an FHA-insured loan, didn’t pay their mortgage, the bank who issued the mortgage foreclosed on the property (not HUD), and it was acquired by HUD. The property is now owned by HUD and they want to sell it, so they list it as a HUD home.
Who can buy a HUD home?
HUD homes are offered to owner-occupants (person who buys the house must live in the house) and after a period of time, if they are not sold, they are available to investors.
How do I find HUD homes?
You can search for HUD homes the same way you search for any other home. In the past, HUD controlled their inventory through very specific channels and agents had to have special keys to unlock their properties (I think I still have a set hanging around somewhere), but as the housing crisis deepened, they changed the rules and simplified the process in order to help move some of their inventory.
Can anyone make an offer on a HUD home?
All offers must be made through a real estate agent registered with The Department of Housing And Urban Development. Most broker in the San Antonio area are registered (including us). The process of making an offer on a HUD home is a little different than other homes, but in general the items you need to know and pay attention to remain the same. Once you and your agent have identified a HUD home as the one you want to purchase be sure to speak with your agent about your expectations about the process as it can take awhile longer than other transactions.
photo courtesy of teofilo