HUD homes are homes that have been acquired by the U.S. Department of Housing and Urban Development (HUD). If a foreclosed home was purchased with a loan insured by the Federal Housing Administration (FHA), the lender files a claim for the balance due on the mortgage. The FHA pays the claim, then transfers ownership of the property to HUD, which sells the home.
HUD ensures their homes are independently appraised and priced at fair market value for their location. These homes are always sold 'AS IS' so it is critical that potential buyers undertake a thorough home inspection before submitting an offer. HUD is not responsible for ANY repairs or improvements so buyers will need to ensure any needed repair costs are worked into their home buying budget.
Homes sold by HUD offer a great money making opportunity! Investors often purchase these homes to fix up themselves and sell at a profit. Teachers and police officers are given a 50 percent discount on HUD homes so I would highly recommend people in these professions check out these types of homes. If you're handy around the house, you could build a lot of equity into your home.
Unlike conventional home sales, HUD foreclosures are sold using a BIDDING process. There will be an advertised Offer Period, during which sealed bids are accepted from agents (all bidders must be pre-approved for financing). Once the Offer Period is closed, HUD will accept the HIGHEST BID offered. There is no negotiating on price or intangibles between buyer and seller. Since you don't typically get a second bidding opportunity, working with an experienced agent to come up with the best possible bid is even more important in these home buying scenarios
You can view HUD listings on their Web site at www.hud.gov/offices/hsg/sfh/reo/homes.cfm