A HUD home (also known as a HUD foreclosure) is a single family or multi-family residential property acquired by the U.S. Department of Urban Housing and Development as a result of a foreclosure action on an FHA-insured mortgage.
HUD homes are sold through a bidding process, with a priority period reserved for potential owner-occupants. Investors are not allowed to bid for HUD homes during the first 10 days that the property is listed. HUD homes are sold “as is,” with selling prices discounted on the extent of renovation and repairs that need to be done.
HUD homes for sale are posted on Internet listing sites by special HUD-contracted management companies. Bids for HUD homes must be placed through a HUD-registered broker or agent and are usually submitted electronically.
Once a winning bid is declared, the purchaser must close the deal within a time period specified by the closing agent. The correct sales contract must be submitted quickly—within 48 hours for most states. A strict settlement deadline is set, usually 30 to 60 days from the date of the accepted contract.