HUD requires all buyers to submit a bid through an authorized HUD Broker. You cannot put in an offer on a HUD Home by yourself. You must use a Broker who is licensed to sell HUD homes to represent you. Less than 20% of all real estate agents are authorized HUD agents. In order for an agent to become an authorized HUD agent they must be sponsored by a HUD Broker. At HUD Homes by City we provide you with an easy search portal to find a home that you are interested in. When you are on the property detail page there are options to schedule a showing (located directly under the main picture of each detail page) Schedule Showing or you can request to contact a HUD Authorized Agent. This is the first step to take in order to get to the bidding process.
When a bid is submitted you will need to provide a certified check payable to HUD in the amount of either $500 or a $1000 for earnest money, and if you make an offer and it is accepted then the earnest money you pay to HUD will be applied against your down payment. The amount of earnest money will depend on the purchase price, all homes over $50,000 require $1000 as earnest money.
HUD provides Owner Occupants the first opportunity during the initial bid period of 7 to 10 days to bid without competition of Investors purchasing the home. After the initial period if there is not an acceptable bid then Investors are allowed to bid. A HUD home is either insurable or un-insurable, and this will dictate if the home can be purchased with a FHA or Conventional loan or if it will be a cash only transaction. Some un-insurable HUD homes can be purchased with a FHA 203k loan that allows making substantial improvements. There are also FHA 203b loans that are easier to purchase a home through, but they require a lender to set up a reserve escrow to make repairs after closing. Conventional loans have many different programs and it is best to talk to your lender to provide you with options. You will need to have a pre-approval letter prior to making an offer and your certified funds payable to HUD. You can obtain your pre-approval letter from one of our lenders at HUD Homes by City, and there is not a charge for this service. You can click here to submit you’re pre-qualification online. HUD requires pre-qualification letters to be very specific in order for the letter to be accepted. Your pre-qualification letter must identify all of the HUD requirements or your bid may not be accepted, so it is important to work with a bank or mortgage lender that is familiar with their requirements.
Once you have provided your HUD Broker-Agent with your earnest money check and pre-qualification letter you are now ready to submit a bid. Your agent will submit your bid online directly to HUD as a blind bid. Some agents call it a HUD auction, but it is actually a blind bid as no other party can see what the other party is bidding. That means there are no other agents that know what you are bidding, so it is fair for all parties. If you are the winning bidder, your agent will have two days to submit your signed contract, earnest money, and pre-qualification letter to the Asset Manager in charge of processing the contract for execution. It will typically take one to two days after the bid dead ends to find out if you are the winning bidder. After you find this out it will take anther two to three days to get your contract back. HUD typically provides you with 45 days to close, and with a qualified lender this can be accomplished. Good luck with purchasing your next home, and we hope it is a HUD home.