The Federal Housing Administration (FHA) is a part of HUD - the part that provides federal mortgage insurance. If a foreclosed home was purchased with a loan insured by the FHA, the lender can file a claim for the balance due on the mortgage. FHA pays the lender's claim, then transfers ownership of the property to HUD, which sells the home.
One significant difference between a HUD house and a traditional house, is that you will need to enlist the services of a HUD registered real estate broker to gain access HUD homes. HUD homes can only be accessed by HUD brokers and HUD brokers are the only ones who can submit your offer to HUD. The offer starts out on paperwork but is submitted electronically to the HUD system.
The selling process for a HUD foreclosure is different as well. It starts with an Offer Period, during which sealed bids are accepted from your agent. Owner occupants get to bid on the HUD houses for sale for the first ten days the listing is active. After the first ten days, if there is not an accepted bid, investors can then bid for the property. At the end of each period, all offers are opened. HUD will generally accept the highest bid, or the bid that brings them the highest net. If the home remains unsold after the initial period, bids are opened as received. Keep in mind that the owner occupants get first priority when HUD considers bids.
Here’s a few other things you need to know:
- Get your financing before you make an offer. You will need an approval letter in writing with your offer.
- Any changes after HUD accepts you initial offer will result in getting the offer tossed out.
- The houses are sold as-is, and no improvements will be made to the property.
- The highest reasonable bid will be accepted.
- Teachers and law-enforcement officers may qualify for special discounts on HUD homes.
All ICON Realty Partners agents are certified HUD agents and know HUD's process very well. Please contact us today for more information.