Realtor® Speak 101: “HUD Homes”

By rerockstar • January 17th, 2009

What is a “HUD Home?”

Recently several people have asked me what a “HUD Home” is and how it becomes one, so I thought I’d take a few minutes to explain (and begin a series which I call “Realtor® Speak 101″). 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?

HUD develops relationships with certain websites that maintain lists of HUD homes. These sites can be searched by the public and an offer may be submitted by a real estate broker registered with HUD. Our local site for San Antonio, TX HUD homes is handled by the Southwest Alliance of Asset Managers (they handle Texas and New Mexico). You can also find these homes listed on our local MLS, which you search right here at this site.

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. My broker is one of those registered agents, which means I can sell HUD Homes. HUD Homes have special keys to allow for showings and an agent must have a set of these in order to unlock the home to show property. I have acquired my HUD keys and taken a special class taught by our local HUD home broker, so if you’re ever looking for an agent with HUD knowledge, feel free to contact me.

Hope that has helped clear up some of the confusion surrounding “HUD homes.” Feel free to follow up with me and ask more questions if you have them. If you have a suggestion for future “Realtor® Speak 101″ topics, let me know as well.

photo courtesy of teofilo