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HUD How?

A "HUD Home" is a residential property that has been acquired by HUD after a formal foreclosure of an FHA-insured mortgage.  HUD become the property owner and attempts to recoup the FHA’s loss.  (These are different than tax foreclosures, typically sold on the courthouse steps.)

In Austin, you can search for HUD owned homes on the Southwest Alliance website. Moxie’s website offers a free foreclosure search tool that allows you to search Austin and Central Texas foreclosures by map, zip code, school district, address, and more - Moxie Realty Group’s foreclosure search.

If you’re lucky enough to find a Central Texas HUD owned home you are interested in, HUD requires you to work with a HUD-registered REALTOR.  HUD will not allow you to submit a bid or view the inside of any foreclosure properties unless you are working with an experienced HUD-registered agent.  In Central Texas, HUD uses a blind, online auction process, which requires you to put your best foot forward if you want to have your bid accepted, since you will have no idea how many others have bid or at what price.  When a property is first listed, there is usually a 7-day period where the auction house compiles bids and opens them all on the 7th evening.  If there where no bids during the first 7-day period, the auction becomes a daily auction.

There is a complicated bid structure (another reason to work with someone experienced), with higher priority going to buyers who intend to occupy the property rather than investors.  This means that a buyer intending to live in the home may win with a lower bid than an investor.  But you can’t just say that you plan to live in the home; if you don’t, HUD may prosecute you for fraud if you win the bid!

Another important difference in buying a HUD home instead of a non-HUD home is that there is no option period, and all foreclosed homes are sold as-is.  HUD will give you an opportunity to perform an inspection, but will not make any repairs to any foreclosed home it sells.

HUD homes are one of the only options remaining to buy with a VERY low downpayment – often as low as $100 or $0 – if you qualify for HUD’s Good Neighbor Next Door program.

Because buying a HUD home is so different, it is important to find an agent who is familiar with the HUD process and who can effectively value the subject property and offer guidance on how much to bid.

For more information on  HUD homes, feel free to contact us.