The Owner Occupants Guide to Purchasing HUD Homes

HUD homes are a great opportunity for owner-occupied buyers to get a great deal. HUD’s process is a little different from most sellers, but if you know how the HUD system works, it is not hard to buy HUD homes. I am a HUD listing broker and I have sold hundreds of HUD homes in the past five years. Purchasing HUD homes can be scary, but if you know the system and know what to expect you can get a great house for a great price.

What are Hud Homes?

In the last year, it has become much more difficult to find a great deal on a house. Many buyers looking for a home are a bit overwhelmed at how fast the market has changed due to low inventory. There are still some good deals out there and HUD homes have some of the best prices around. HUD homes were purchased with an FHA loan and then foreclosed on. Because the government insures FHA loans, many of these properties go back to the government and become HUD homes. Purchasing a HUD home is a great way for an owner-occupied buyer to buy a home because HUD gives priority to owner-occupied buyers over investors. This article focuses on the owner-occupied process for HUD homes, but I also detail the investor process in my Investors Guide to Purchasing HUD Homes.

Where can you find HUD Homes for sale?

The most important thing to know about HUD is HUD lists every house they have for sale on their website and anyone can view them. It is very simple to search for homes on The search function is on the home page; enter the state and any other search criteria. You can narrow it down to city, zip code, county, or address; you can search for any of those items one at a time or all at once. Only active HUD listings are listed on If a home is under contract, it will not show up in your searches. A property may not be on the site if there are price changes or a new appraisal ordered by HUD. If you cannot find details on a HUD home, your Realtor should be able to figure out the status. There are some cases where a HUD home is only available to a special group of buyers and in those cases, the home may not be in the MLS.

Here is a great article on how to buy homes from the MLS.

Check out the video I created below to see how to use the HUD website where HUD homes are listed for sale

What makes HUD homes different from other types of listings?

Purchasing HUD homes is very different from purchasing any other type of property. The offering process, contract process, inspection process, closing process, and loan process are all a little different with HUD. I will go into detail on how to bid, on how to close, and on everything in between with a HUD home. I hope this guide and your local Realtor can help you successfully purchase a HUD home! State contracts are not used on HUD homes and HUD does not pay costs that many sellers typically pay.

HUD uses different asset management companies to sell their homes

HUD uses asset management companies to sell and manage HUD homes. HUD uses property preservation companies to maintain HUD homes. An asset management company overlooks the bid process, contracts, and helps close HUD homes; they also hire local real estate agents to list HUD homes. Property preservation companies take care of routine maintenance, winterizations, and emergency repairs on HUD homes. Each region in the country has different asset management companies and different preservation companies. Every company has different policies on the sales of HUD homes; you may not encounter the exact same procedures from different companies.

Update 2016: Most of the country now has one asset management company per region. 

Why are some HUD homes on but not on the MLS?

HUD will list properties differently depending on the repairs needed and potential buyer’s qualifications. On uninsured properties, HUD will list them on for a seven-day lottery period, but the only eligible bidders are non-profits and government agencies. During these seven days, some asset management companies list the home in MLS and others do not. Another program HUD uses is the Good Neighbor Next Door Program (GNND). In this program, HUD sells designated houses to firefighters, police officers, teachers, and EMTs. Many special requirements must be met to purchase a home in this program, which I will discuss later. One of the requirements is that you must occupy the home for three years. Since the property is not eligible for all buyers, some asset management companies list them in MLS and some do not. If you see a property in Hudhomestore, but not in MLS, check to see who the eligible bidders are. The information is listed on at the top of the property listing.

For more information on investing in rentals the right way, check out, Build a Rental Property Empire: The no-nonsense book on finding deals, financing the right way, and managing wisely. The book is 346 pages long, comes in paperback or as an eBook, and is an Amazon bestseller.

When can owner-occupied buyers bid on HUD homes?

HUD has an initial bid period for owner-occupants, non-profits, and government agencies only. To simplify, I will refer to this bid period as the owner-occupied bid period. HUD classifies properties into different categories based on condition and those properties have different bid periods. Some properties qualify for FHA financing and some do not, depending on the dollar amount of repairs needed. The properties that go FHA are listed as insured and the properties that do not are listed as uninsured.

If a property is listed as insured, there is a 15-day owner-occupied bid period, with a 10-day initial bid period. HUD accepts bids for the first 10 days and then reviews bids the next business day. If HUD does not accept a bid in the first 10 days, the home will go to a daily owner-occupied bid period. HUD reviews all bids the next business day after they are received until the property has been on the market for 15 days. On the 16th day after the home has been actively listed, investors are able to place a bid on the property. HUD lists the exact amount of time left in the bid period at under period deadline.

If a property is uninsured, there is an initial five-day owner-occupied bid period. HUD reviews all bids received on the next business day after the fifth day and if no bids are accepted, investors can bid on the sixth day.

If you see a property still on the day after the bid period has expired, it does not mean the home is still available. HUD reviews bids the next business day and if the bid period ends on a weekend, HUD will allow bidders to place bids after the initial bid periods have ended. HUD homes may also appear on Hudhomestore for a short time in the morning after a bid period ends because HUD has not reviewed the bids yet. HUD removes them after they accept bids and it can take some time to review bids on thousands of properties across the country.

Here is a breakdown of the bidding timeline.

For insured homes:

  • Fifteen-day owner occupant, government agencies, and non-profit only bid period. HUD collects all the bids for the first ten days of the bid period and reviews them on the next business day. For any bids received for the next five days, HUD reviews the following day. (Not sure if they review them the same day or the day after the bid is received during this time.)
  • Investors can bid on the sixteenth day the home has been actively for sale. You can see this date by looking at the period deadline. Investors can bid on the next day after this deadline.
  • If the price is lowered, the owner-occupant period does not start over. Investors can bid right away.

For uninsured homes:

  • Seven-day lottery bid period. Government agencies and non-profits only can bid. The home is listed on Hudhomestore, but not on MLS.
  • Five-day owner-occupant, government agency, and non-profit only bid period. HUD accepts bids the first five days and opens them the next business day. Investors can bid on the sixth day.
  • If the price is lowered, the owner-occupant period does not start over. Investors can bid right away.

How long does an owner-occupant have to live in a HUD home?

HUD requires an owner occupant bidder to live in a HUD home for at least one year after they purchase the home. HUD allows an owner-occupant 60 days to repair a home before the occupant must move in. HUD only allows individuals to purchase a HUD home as an owner-occupant once every two years. You can purchase a HUD home as an investor as often as you like.

What does FHA insured with repair escrow mean on HUD homes?

HUD does not allow any repairs to be made to properties and typically does not repair any of their properties. However, HUD wants to sell homes to owner-occupied buyers and many HUD homes need some repairs that would not allow them to qualify for FHA financing. HUD uses an FHA repair escrow to help owner-occupied buyers get into these homes. The amount on under FHA repair escrow is the amount that a HUD appraiser has determined it will take for the home meet FHA guidelines. The escrow could be $0, in which case the home does not need any repairs in order to go FHA. If there is any other amount, the home will have to have some work done to qualify for an FHA loan.

The escrow repair amount is added to the buyer’s loan at closing, it is not a gift from HUD. The work is to be done after closing by licensed contractors within 90 days, and the lender will pay out the escrow amount directly to the contractors.

The details of each item that needs repair are listed under the addendum on The total repairs cannot exceed $5,000 for the FHA repair escrow. HUD adds a ten percent cushion if the repairs cost more than expected, so technically there could be $5,000 in repairs and a $500 cushion for a total escrow amount of $5,500.

Update: HUD no longer lists a repair escrow because they stopped allowing FHA buyers to use the HUD appraisal. Buyers must now get a new appraisal and determine any escrow repairs from it. 

Can the repair escrow amount be changed on HUD homes?

Yes! It takes a bit of work, but the repair escrow amount can be changed. If you find out through an inspection or other means that a repair is not needed or more repairs are needed, you can adjust the escrow amount. HUD will need a letter from your lender explaining the need for the change and two bids from contractors detailing the amount of the new requirements. Again, the total escrow repairs cannot exceed $5,000 on HUD homes.

Can I use the HUD repair escrow on other types of loans?

No, the repair escrow can only be used on FHA loans.

Can you use FHA 203k rehab loans on HUD homes?

If a home needs more than $5,000 in repairs to qualify for FHA, there is still an FHA option. The FHA 203k rehab loan is a great program that allows a buyer to make repairs after closing and finance them into their loan. There is no limit to the dollar amount of repairs that can be made, but it can be a complicated process. This program can be used on a house with less than $5,000 in repairs as well if the buyer wants to make more repairs than FHA requires. The loan can also be used on uninsurable homes as long as it is marked on that an FHA 203k is being used.

A 203k loan requires two appraisals, one for the as-is value and one for the after repaired value. The loan also takes longer to close and has a few more fees than a normal loan, but it is a great option for those looking to make major repairs.

How does an FHA 203k loan work?

What is the Good Neighbor Next Door Program?

The Good Neighbor Next Door Program (GNND) is a HUD specific program geared towards EMTs, teachers, firefighters, and law enforcement. HUD designates certain houses for this program and they will give a 50% discount to qualified buyers! In order to find these properties, go to and click on Good Neighbor Next Door Program in the blue box. Then click on your state on the map to the right of the blue box. This will pull up all GNND properties in your state. Do not be surprised if there are not many properties available as HUD designates very few properties for this program.

HUD also has very strict policies regarding who can bid on GNND properties. The buyer must be a full-time employee in their field, work within a certain mileage of the property, and live in the property for three years. Bidding on a GNND is very simple. Your agent submits the full price in the GNND bid period and if HUD accepts your bid, they automatically discount the property 50%. These properties are not always in MLS, so check frequently to find these listings.

HUD does not pay a commission on these properties to the listing or selling agent. Many times the agent representing the buyer will require the buyer to pay a commission directly to the buyer’s agent. If more than one buyer bids on these properties, HUD will randomly select the winner.

How does an owner-occupied buyer bid on a HUD home?

Every buyer must use a HUD registered real estate agent to submit a bid on a HUD home. If you are shopping for an agent and you are interested in HUD homes, ask your agent if their company has a NAID number. If they do not have a NAID number, they cannot submit a bid for you. Any office can get a NAID number from HUD, but it can take up to six weeks. If your agent’s office has a NAID, they can register on and submit a bid for you very easily. The bid is submitted online and no documents are uploaded with the bid. HUD requires the purchaser’s social security, tax identification, or EIN number in order to submit the bid.

What happens after my bid is submitted to HUD?

HUD will only respond to your agent through email if your bid is accepted. If your bid is not accepted, HUD will not notify your agent, but your agent can look up the bid status. Your agent has to log in to and go to bidder functions. They can search for bids that they submitted and the bid status will be listed on HUD. The system may say reviewing bids, accepted, canceled, or other bid accepted. If your bid was not accepted and no other bids were accepted, you can bid again as many times as you like. In some cases, HUD may counter your offer. Their counter is only a notification informing you of what net price HUD will accept. If you enter a bid that nets HUD the counter price or more, they will accept it as long as no one else submits a higher bid.

How low of a bid will HUD accept?

A buyer can submit any bid amount they want on a HUD home, but HUD has certain guidelines for what they will accept. HUD hires asset management companies to select agents, look over properties, market HUD homes, review contracts, and monitor bids. Those asset management companies are given guidelines from HUD on what bid amount they can accept. Usually, they are allowed to accept a net amount around 10 to 12 percent less than asking price. The net amount is what HUD will receive after commissions and closing costs are paid. HUD always pays the listing broker three percent commission and the selling broker can get up to three percent commission. If HUD is paying a six percent commission total, the net amount that they will accept has dropped to 4 to 6 percent less than asking price. If the buyer wants closing costs, the amount drops even further. HUD will accept different amounts in different areas of the country; these results are typical in Colorado.

Here is an article with more information on different loans with low down payment options.

Is it worth it to submit a bid I do not think HUD will accept?

Yes! The first reason to submit all bids is that HUD asks all bidders if they can hold their offer in a backup position. If an accepted offer cancels their bid, HUD will automatically accept the next highest bid as long as it is an acceptable amount. It does not hurt to mark this box, as you are under no obligation to continue with the contract if HUD accepts your bid and you no longer want the property. If HUD reduces the price, they will review bids that they have already received to see if any are now an acceptable amount after the price change. Your low bid could be accepted before anyone else gets a chance to submit a new bid after the price change. There are also occasions when a low bid that does not meet HUD guidelines is accepted. This usually happens on aged assets that have been on the market for over 90 days. The asset management company can ask for special approval from HUD on these low bids. When this happens, your agent may receive a counter from HUD in the morning and then an acceptance later in the day. This is because the asset management company could not accept the bid right away, but they sent it to HUD and HUD approved the bid later in the day.

How do you send your contract to HUD?

If HUD accepts your bid, they will notify your agent by email and give your agent instructions on how to send the paperwork to HUD. Your agent will have 48 hours to send the original documents to HUD; the 48-hour period is extended for weekends and holidays. HUD has their own sales contract, addendum, and disclosures and they require a pre-qualification letter or proof of funds letter if you are paying cash. Your earnest money must be sent with the package (you may not have to send earnest money with the new buyer select program). HUD requires certified funds for your earnest money. Your agent should be able to help you with the package and explain all the details. There are a couple of very important documents to pay attention to that I will go over in the following sections. If your package will be late, make sure your agent notifies HUD; HUD may give you a little extra time. If your package requires corrections, HUD will email your agent and usually, corrections are due within 24 hours. Make sure your agent is checking their email frequently!

How do owner-occupied buyers get their earnest money back on HUD homes?

HUD has very strict policies on earnest money returns and forfeitures. Investors have a very difficult time getting their earnest money back, but it is a little easier for owner-occupied buyers. HUD lists many reasons why they will return an owner-occupants earnest money, the most common being loan denial. When you sign your contract, there will be a form called earnest money forfeiture policy. Make sure you read this carefully and understand exactly under what conditions HUD will return earnest money to buyers. The earnest money amounts are $500 for contracts under $50,000 and $1,000 for contracts over $50,000.

Is a HUD home that I buy for my children considered owner-occupied?

The only way a buyer can be considered owner-occupied is if the person living in the home will be on the deed when HUD sells the home. That occupant has to live in the home for at least a year and cannot buy anymore HUD homes as an owner occupant for two years.

How serious is HUD about the owner-occupant period?

Very serious! HUD makes owner-occupants sign a document confirming that they are an owner-occupant. If they are found to be an investor, HUD can fine them $250,000 with prison time. It is a federal crime to misrepresent yourself as an owner-occupant when your true intention is as an investor. Not only can the buyer be fined and sent to prison, but also the buyer’s agent and their entire office can lose their ability to sell HUD homes. If you think you will not be caught, remember, many investors who would love to bid on HUD homes but cannot because of owner-occupant rules, will have no problem turning in other investors that break the rules. Listing agents are also encouraged to keep an eye out for investors posing as owner-occupants.

How do inspections work on a HUD home?

HUD has a different inspection policy than most REO sellers. When HUD lists a property, they do not turn on any of the utilities. When HUD signs your purchase contract, they will email a utility turn-on request form to your agent. You have 15 days from the time HUD signs the contract to do your inspection. They allow a three-day window to turn on the utilities. It is usually best to make your three-day inspection window as late into the 15-day inspection period as possible because you have to submit the form to HUD’s property preservation company, wait for them to approve it, and then get utilities turned on in your name. It can easily take over a week to get the form back and get utilities turned on, so make sure your agent submits the request form as soon as possible.

HUD does not pay for utilities or any turn on fees and they do not de-winterize the property. In fact, if you live in an area that requires winterization, you will have to send in $150 with your turn on request form if you want to turn on the water during the winter season, which is typically October 1 to April 30. The fee is for the property preservation company to re-winterize the property after you complete your inspections. If HUD found the property’s plumbing system did not hold pressure, they will not allow you to turn on the water (the air test is done before listing).

If you find issues during your inspection, you have two choices. Cancel the contract or proceed to close, knowing that HUD will not repair anything. They are very clear; HUD homes are sold in as-is condition and HUD will not make any repairs even if the lender requires it. They are also very clear that they will not return your earnest money if you find inspection issues that cause you to cancel your contract. As I said earlier, HUD does an inspection before listing each property and the basic results are listed on You will find the inspection under addendum on Hudhomestore. The document called PCR lists the general condition of the plumbing, electric, HVAC, and roof. Do not depend on these inspections to be perfect! Many times the HUD inspectors are only able to do a visual check since the utilities are not on.

How to get a great deal on a house.

Appraisals for non-FHA loans on a HUD Home

HUD does an appraisal on every home before they list it. HUD previously listed their homes at the appraised value but they recently changed their policy. All new loans including FHA must now get a new appraisal if required by the lender. If your appraiser requires the utilities to be on for the appraisal, you have to follow the same procedure to turn on utilities as you did for the inspection. The best practice is to schedule the appraisal at the same time as the inspection if possible. The biggest issue I see with appraisals is plumbing. HUD inspectors will do a pressure check on the plumbing system before the home is listed. The pressure test will fail if there is a leak anywhere in the system and HUD will not allow you to turn on the water for your inspection or appraisal. If the system fails the pressure test and your appraiser requires the water to be on, you are out of luck. HUD will not repair the lines and no repairs can be made before closing. Please pay attention to the HUD inspection before bidding and talk to your lender about the appraisal process. I have seen many deals fail because the water could not be turned on for appraisals on HUD homes. There are a few solutions to a plumbing problem: a lender can escrow for plumbing repairs or a portfolio lender may be able to do the loan without utilities being on.

The other issue that can come up, but rarely does on HUD homes, is an appraisal coming in low. Usually, HUD homes are priced low enough that an appraisal value is not an issue. If the appraisal does come in low or the appraisal requires repairs, HUD will not make repairs or price adjustments. Again, the only choice will be to cancel or continue with the original bid price and terms.

What is an appraisal?

How do you close on a HUD home?

Different asset management companies have different closing periods. Some allow cash buyers 30 days and financed buyers 45 days to close. Other companies allow 45 days for cash and financed buyers. HUD will charge you if you must have an extension due to your lender or other fault of the buyer. Typically, the fee is $375 for a 15-day extension day but can be lower for lower-priced properties. The exact fee schedule is listed on one of the HUD forms you will sign. HUD will grant two extensions, but if a third is needed, HUD will need proof that closing is imminent or they will not extend the contract.

How does title insurance work on a HUD home?

Another cost that HUD does not pay that most sellers do pay is title insurance. Make sure you factor this cost into your figures when bidding on a HUD home. HUD does not require title insurance, but I highly recommend you get it. HUD does the best they can, but they are dealing with other lenders homes that were foreclosed on and had FHA financing. Sometimes a title issue will slip through the cracks and if you do not have title insurance, it can be a nightmare to get it cleared up. I sold a HUD home a few years ago, that was owned by a large bank. Six months after the sale, we learned the bank did not have clear title. The title company was able to clear it up, but if the buyers had not purchased the insurance, it would have been on them to figure out clear title.

Can you make repairs prior to closing on HUD homes?

HUD is very clear that they will not make any repairs prior to closing and the buyer is not allowed to alter the home in any way before closing. Some buyers may think it is not a big deal to fix a small plumbing leak or do some painting before closing. It is a very big deal! HUD homes are federal property and it is a felony to make any alterations before you own the home. If HUD finds out that any repairs were made, they usually cancel the contract on the spot, take the buyers earnest money, investigate the buyer’s agent to see if they knew about it, and then consider charges depending on the severity. Do not make any repairs, change the locks, remove signs, or remove anything from the home before closing!

How does the buyer select closing process work on HUD homes?

HUD just introduced a new program on their HUD homes. HUD previously used their own title companies to sell HUD homes, although the buyer could use their own title company for their side of the transaction. With the Buyer Select program, HUD allows the buyer to choose the title company for the entire transaction. With most HUD asset management companies, the earnest money is now delivered to the listing agent who delivers it to the title company. The buyer is allowed to choose any title company they would like to close the transaction and HUD will get them registered in the system once a bid is accepted.

Those are the basics for owner-occupants looking to buy HUD homes. Purchasing HUD homes can be difficult because there are so many things to know, but they can be a great deal. If you do not feel I addressed your question, please feel free to comment or email me with any questions about HUD homes or my investment strategies!

464 thoughts on “The Owner Occupants Guide to Purchasing HUD Homes”

  1. If a hud house was built for a family. Now the mother has moved in with a boyfriend in another town and running a business. Is it ok that the house is left for the oldest child to live in and pay the rent?

  2. Hello Mark!
    My stepdad is helping me and my husband buy a HUD home, since we can’t get any kind of loan. Does my stepdad have to live in the house? Or if he puts me as a purchaser with him will that be ok? Or will we just not be able to get the home at all?

  3. Hello Mark, we are looking at a HUD home, however I can not find it on the HUD homes for sale website. The only reason I know it to be a HUD home is by word of mouth from the listing agent. The home is priced at $262,000; which is what the appraisal apparently came in as that was done by HUD, to determine the listing price. It has been on the market for 68 days with zero offers and one showing, me! Haha. The home does not meet minimum
    HUD standards, there are major safety issues and deficiencies. While looking at the comparable homes in the area, and taking into account the extreme distressed condition of the home, we suspect a fair market price is in the range of $140,000-$160,000. How can we appeal the appraisal, because it is definitely obvious something was done wrong, and due to HUD guidelines, not much can be done about this. Obviously us, or anybody is going to pay $100,000 more than the home is worth in *distressed* condition. I am located and Texas, and truly look forward to your response to this peculiar situation!

    • Anything that would be for sale would be on the HUD site. If it is already under contract it would not be. Are you sure it is a HUD home?

  4. Hi the plumbing is damaged in a house i want to bid on and it say here HUD will not turn on utilities . If HUD denies it do i get my money back because i wont be able to close

  5. We are currently under contract for a HUD home. It’s my understanding after reviewing guidelines for HUD Ect. that the seller (HUD) pays the brokers commission. the way the worksheet reads, That money is in our financed amount. Does HUD refund the buyer ?

    • I am not quite sure I understand. On the settlement sheet there is a buyers and a sellers side. The real estate commission would be something the seller pays at closing. If you offer to pay $100,000 for the house, you pay $100,000 and the seller gets $100,000 minus their costs. One of those costs would be the real estate commissions. The real estate agents get paid at closing by the seller, which does not affect your side of the purchase. If you had paid your agent yourself, you would pay $100,000 plus whatever the agents real estate commission is. Usually the agent for the buyer is not paid by the buyer, but directly by the seller. The listing agent is paid directly by the seller as well.

  6. Hello Mark!
    We are very new to the HUD world. We have a lot to learn!! We are currently interested in a HUD home but we found out there is already a contract on it. Is that the final say? Are there any other options to purchase over that contract?

  7. Hello, Mark. We are buying a HUD home in TN, it seems that the close date keeps being pushed back, we have already got our CD. Our close date on it was the 8th, then we were told the 11th and now the 13th. Why cant we just close? We are being told it has something to do with this new 5 day wait thing HUD has, does that start the day they get everything and do Saturdays count?

  8. If a property has been on market for over 100 days and is priced too high. Can someone contact the asset manager and bring the issue to their attention?

    • HUD will automatically change the price after about 45 days. It could be the house was under contract and HUD does not count those days as on the market.

  9. I’m married and our realtor placed a bid on a house with only my name on the deed. We live in a community property state and I plan to pay cash for it. The realtor didn’t mention anything about the 12 moths and 2 years requirement before placing the bid (first time home buyer). Actually I didn’t know the house was HUD until after he placed the bid. Are all foreclosures classified as HUD homes? Anyway, does the 12 month requirement for owner occupant applies to cash purchase also? Does my husband have to wait 2 years before he can buy a separate house with only his name on the deed. Does this 2 years apply only if the one he wants to buy is HUD house? Thank you.

    • The restirctions are for only HUD homes. It does not matter if you pay cash or not, as an owner occupied bidder you must live there at least one year. The two year waiting period is only if you want to buy another HUD home as an owner occupant. No, not all foreclosures are HUDs.

  10. Hi Mark, Thank you for your very informative video. We are interested in a house that will be on hudhomes, but is not yet. The house was previously listed for sale from the owner with a real estate agent. It did not sell and then eventually foreclosed. Is there a way to see the owner disclosure statement from when it was listed with the realtor? When the appraiser determines a price, do they take into account the time it was on the market and did not sell at that price, or only based on nearby sales?

    • No, I don’t think you will be able to get that disclosure unless it was part of the MLS documents and an agent can pull it up for you. The appraiser looks at current market comps, not the history of the property because they have no idea what condition it was in or other factors when they last tried to sell it.

  11. Mark If a HUD home has to go back on the market after a pending bid they accepted did not make it to closing, does the 15 day “Bid period start over again? If I make an off do I have to wait until this time is up before they make a decision? Thanks

  12. I’m wondering if you can give me insight on a problem I’m having. Currently I have a bid in on a hud home. It was accepted and the loan process was started. I’m taking a 203k loan as I knew there were small repairs. During our initial walkthrough we noticed a cracked seam in the ceiling. I was told it was most likely from the weather changes as I live in upstate NY. The condition report stated the roof condition was in good shape. We put in the bid and it was accepted. During the second walkthrough we noticed the crack was bigger, we had a contractor look at it and he told us the roof was not in good repair and it needs a new roof that will cost us 18k. Its been about a month and a half now and the damage has quadrupled. There is now water damage in 3 floors, mold and water damage. We have contacted the agent to no avail. No one seems to want to protect our investment but us and obviously we can’t touch the property. We have pictures proving at the time the bid was accepted the house was NOT in the condition it is now. We still have 2 months before the house closes and the weather said its going to rain heavy for half of that. The property manager states its still in good condition and hasn’t reported or fixed the damages to preserve the homes condition.

    What can we do? Who can we contact? Is there anything as buyers we can do to make HUD liable to fix repairs or adjust the price? It was 18k to fix the damage, now it will be 25k.

    Any help would be great. Thank you!

    • Call the HUD number on and tell them the house has a leaking roof and the agent will not respond to you. HUD should make sure there are no leaks and might give you a credit for damage that occurred after it went under contract.

  13. Hi Mark!

    Thank you so much for such a thorough and informative post. This post helped guide me through the bidding process on a HUD home which I’m now under contract on. Super exciting as it’s my first purchase. With this first property, I’ve started a small blog to document the ups and downs. I looked forward to your future posts and buying many more.

    Thanks again!

  14. Hello Mark,
    The home I want to buy is in very bad shape. I will qualify as owner occupant. If it becomes available on HUD web site and if I can win the bidding I would like to DEMO the house completely and build a new one. I have been searching the internet and HUD web site and cannot find anything about DEMOLITION of the house. Can you help clarify?
    Thank you

      • Hi Mark,
        You have great info!
        I am an agent and I am trying to gather info before doing my first bid.
        What happened if the owner does not move within 90 days? Or lives partially in the house. What about if the owner does not live in the house at all but is not renting or selling the property?

        • If they bid as an owner occupant it is considered fraud against the federal government and punishable up to 2 years in prison and a 250k fine.

  15. Hi Mark, my husband and I are interested in a hud home. We would be using usda financing.
    according the the pcr the breaker box is missing component. Will hud fix breaker box problem in order for an appraisal to be possible?

  16. Hi Mark,
    We just bought a hud home last week. We had a inspector come and look at it but he keeps telling us that we should tare it down and start over. Our bank is only allowing us money to fix it up. The inspector said that the stairs doesn’t have enough head room and the house isn’t up to code. The house was built in 1900’s. I don’t think our inspector realizes that the house was a hud home. Can a inspector give us the right to tear it down if it’s not up to code and if it’s a hud home? We plan on gutting it out and putting everything new back in.

    • It could be the inspector is over reacting. Sure you can tear it down, but that might make it impossible to be an owner occupant if that is your plan and would violate your contract with HUD.

  17. I have a HUD home set to close Friday and now the 6d is showing a 3,000$ lien for past complaints. Will HUD pay these or is the resonsibility of the buyer?

  18. Hi Mark, I and my cousin want to bid a HUD home. Only I will live in that home, but I need my cousin to be co-borrower for qualifying the mortgage. Are we qualified for bidding in Exclusive period of HUD homestore? I can sign the form Owner Occupied, but my cousin cannot sign it since he will not live in the home. Is it OK?

  19. Thank you for all of the useful information! My husband and I have our eye on a particular home that has had a HUD sign in the window for about 4 months. It is not listed on the HUD home store, but it does have a case number and HOC assigned to it. No asset manager, listing manager, or field service manager are assigned yet according to the HUD home store. The owner of the home (older lady) passed away about a year ago. According to the county website NOVAD MANAGEMENT CONSULTING LLC paid all of the owed taxes and utility bills just 4 days ago.

    Is there any way that we can get an idea of when this home will be listed? This is our dream home, but if it could be years of waiting we will keep looking elsewhere.

    • It is really hard to tell and there is a chance it might not be listed by HUD. Sometimes they sell their loans or the bank who lended on it takes the home back.

  20. Hi Mark, I have a ratified contract on a little 3 bedroom house. How is it determined what can be put into the fha escrow up to the 5000? My home inspector claimed that repairs could exceed that for everything. It was listed as insurable but my agent unfortunately seems to be clueless about any of this since he never dealth with a hud home. Since hud wont do repairs, can I ask for a lower price in an addendum due to their being more work than I thought and seemingly more than what was told by hud? I am buying as owner occupant. thanks

  21. First, thank you for this informative discussion. These are the best explanations I’ve seen in re making a HUD purchase. My in laws are buying a HUD owner occupier home for their young sons (college students) to live in. They made the offer under their own names and didn’t list the children. Can they still purchase as owner occupiers if they list their sons on the title as well as themselves?

  22. I want to buy a hud home and tear it down to build another home on the same property. Do I have to wait until after the first year I own the home to do this based on the 1 year occupancy? Also, I wanted to live in my current house while the new home is being built. Is that okay? Can i just receive mail at the new home to meet occupancy requirements?

    • As an owner occupant you have to move into the home within 90 days of buying it. In this case it sounds like you would have to bid as an investor.

  23. Hi, we recently bid on a HUD home. They accepted another offer, but the other party did not send paperwork in time and they ended up accepting our offer. We accidentally submitted our bid with the wrong EIN as we are paying for the home with cash. We submitted our contract with the wrong EIN also. What do you think will happen at this point? What should we do? Once they find out that the EIN is wrong will they cancel our contract and accept another offer?

  24. Hi, great post by the way…so my husband and I just bought a Hud home as owner occupants. My husband only is on the deed. Does this mean in a year we can sell the house and then buy a Hud property in my name, if we so choose?

  25. Hi Mark,

    I found your article to be very helpful. I am interested in a HUD home that is below market value for the area. My agents thinks that the home will get a lot of offers. I don’t have a lot of money to come out of pocket upfront for a down payment and closing cost. What steps should I take to get the best shot for the winning bid?

  26. I have had several calls on a home list for Owner Occupied listing period. They all own homes already. Can they rent out their home and buy this home if they win the bid? Or can they buy the home to live in and then sell their current home if they qualify financially?

  27. Hi Mark,

    I am currently in the 15 day period after my bid was accepted by HUD on 10/19. Unfortunately, my wonderful realtor did not notify me it was accepted until 8 days after the fact which means I now have until Nov 3 to get inspection and appraisal done. The property condition report said the house passed plumbing and electrical. The realtor seems to think that he and I can go to the house, turn on the water with a water key in order to dewinterize it and thus have the utilities on for the inspector and appraiser. What are your thoughts on this since I probably don’t have enough time to legitimately get the utilities turned on via the management company?

    Also, assuming this does make it to closing, how would HUD react to me, the O/O, renting a room out while still living there and maintaining ownership? Is this allowed? I haven’t been able to find any info out about this. Thanks so much for your help- you are by far the best resource I have found for questions regarding HUD homes.

    • I meant to say the contract was signed by HUD on 10/19 and I didn’t get it back until today (10/27). Also, I should clarify that we would be turning on the water without permission from the management company (ie not sending in the form, waiting 3 days, and paying the $150 rewinterization fee). I already switched the power over under my name.

      Should I just try to legitimately have the utilities turned on, even though it might be outside of the 15 day opt out period before I can get it inspected and appraised? What will happen if HUD finds out that we did this?

      One last question: Is it possible to find out what the next highest bids were? My realtor and broker told me that the selling agent cannot disclose that information but I’m beginning to not trust them and I feel like they just want to close the deal.

      Sorry for all the questions but I feel like you’re an honest person who has nothing to gain from helping buyers so thanks for that.

      • You should ask HUD for an extension on the inspection since you got the contract so late. They should do it. If they find out you turned on the water without doing those steps they will probably cancel the contract and take your earnest money. They do not take lightly to that stuff. If there is any damage to the home from the water being turned on it will be your responsibility as well. Did the pipes hold pressure during the air test?

        You cannot see what the next highest bids are. HUD does not publish it and the listing agent does not even know. All bids are sent straight to HUD and listings agents do not get to see them.

    • Sorry read your other comment first. I would still ask for the extension, but your agent could get in big trouble for doing that. Your an still get utilities turned on, but you may lose your earnest money by being past the 15 days. You can rent out a room as long as you live there too and the zoning allows it.

  28. How do you know for sure if a home is eligible for the Good Neighbor Next door Program? I found two homes listed when I used the link for the GNND program but my realtor told me they are not eligible because they “are not in Revitalization Area”. I’m looking at Coconino County, AZ btw. Thanks for your thoughts. The information you post has been exceptionally helpful to me.

    • You go to the hud site and click good neighbor program and then the state you want to buy in, those are all the good neighbor houses. It will say house is in the good neighbor program on the property info page as well and when you try to bid

  29. I have to say, thanks for this great article first of all. I am brand spanking new. I have a question that I don’t think is clearly labeled out (for a dummy like) me.
    I have put a bid in on a house that is IN (the house has mold in the basement). I am planning on using FHA, and if possible even 203k (to add additional downspouts, and some concrete work to seal the driveway so that water doesn’t end up in the basement, and hopefully also change cabinets etc).
    I love the house except the mold. The realtor has tried to give me assurances that it is not a dangerous type.
    500 sqft of Mold is stated in the HUD inspection report.
    a) Which is the better way to go, 203K or regular FHA?

    The more pressing question:
    b) If i win this bid(which I think I will), the lender will surely want the mold stuff fixed and fixed right after home inspection. Does that mean I have to fork out 5k-10k (or whatever would cost to do mold remediation for the basement)out of my own pocket within 15 days to fix this problem or does the lender put the money in escrow and expect it to be fixed after closing?

    Tangential to this question is, since the property was listed as IN, what method is best in convincing the lender to approve and close? Should I prepare multiple lenders just in case a lender falls through because of the mold problem?

    One thing I learned from your blog is that I can be proactive and look and search for appraisers and home inspectors, and maybe even Environmental specialists(eventhough i don’t even know where to find them). Is there anything else you would suggest I should be doing to ready myself now?
    this part of the closing process I am still not clear even after reading your great article.

    • Regular FHA is cheaper, but you can’t finance as many repairs.
      With FHA repair escrow the repairs are done after closing and are called out by the appraiser. You cannot fix anything before you buy it.
      Line up inspector and companies to give you bids on any repairs the appraiser may call out. You agent and lender should be able to help with this. Make sure your lender knows how the FHA repair escrow works on HUD

  30. Hi we purchased a HUD home almost 2 years ago and the home is literally falling apart now, we’ve been discovering so many things that were not in the repair addendum. We’ve seen mold and the report showed NO mold, and we literally have rain pouring through the walls as i type this. Our agreement required us to live in this home for 3 years but at this point that is not an option due to leaks everywhere, bugs, all sorts of things going on. What are our options for repair, reimbursement or moving

    • HUD makes no guarantees on condition. If you have to live there three years, you most likely bought in the good neighbor next door program? HUD always says their inspections are for informational purposes only and the buyer should get their own inspection done as well. Especially since the utilities are not on during HUD’s inspections. If it has been 2 years, how can you know the mold was there when you bought?

      If you move out early you will have to pay back some of the discount you got if you used the GNND program. You will need to repair the home yourself and or have a contractor do it as HUD will not fix anything.

  31. Hi Mark,

    I won a bid on a HUD home this morning and when my realtor forwarded me the acceptance email, the bid was 40K over what I agreed to. There was a misunderstanding between the loan amount and the bid amount as I intend to use FHA 203k financing. Is there anything I can do here?

  32. Hello,
    I bought a house a couple months ago as owner occupant and I have to own for a least 12 months. I have to move out of the state in 4 more months which I would own the house only for 7 months. Will I get in trouble if I sell it? I don’t know what to do.

  33. Hello
    We just put a bid in on a HUD home. We bid 3k more than asking price. We were then told that another bid was accepted but we were a backup bid. Two days later we were told that the accepted bid fell through and no other bid was accepted and that the house would go back up for bidding. That was two weeks ago and it has yet to go back up for bid and we can not get anymore information on the house? Is this common? Thank you for your time.

    • How do you know the original bid was falling through? It is possible that another backup bid was even higher than yours and accepted.

  34. Mark, Thank you for sharing all of your knowledge regarding HUD purchases. I am financing with FHA and was not looking for a HUD home but just fell in love with one. I am finding that my agent and lender do not know much about it. They have given me some completely false information. We are trying to determine if we should bid and if an FHA loan is even possible. From your information it seems like it might be. The home is insured for FHA financing. Most of the house is in great condition, however because the utilities like power are off, so are sump pumps in the finished basement. There is obvious evidence of water damage. Mold is visible through carpet, on walls, on ceiling. Am I understanding correctly that it is possible to still use FHA financing with the 203b on this home as long as the cost of repair to satisfy the FHA appraisal is less than 5000?

  35. question; I optioned a hud home …the day before closing the bank says the house does not qualify for FHA loan neither for a conventional one …this has do to do with an illegal add on pus it has more than 2 apartments…now I do not know what to do…the closing agent is not very helpful and a different realtor than mine says that the closing agent should contact hud and the house should go back to the bank and have the repairs done…what should I do???

  36. Hi Mark
    Got pre-approved, Bidded on a HUD Property, property condition sheet said plumbing problems, pipe missing, got the bid, Got conventional loan file approved and passed on to underwriter with a closing date 9/12th. Appraisal came back at subjective to turning on water and gas. Lender wanted new roof, and water and gas on. I reminded the lender that it is a HUD as is and I can work on the property until I close. Lender asked me to get 203K loan to have repairs done. Got estimate today. The Estimate came in at $29,000 worth of work that I estimated should cost $11,000 at best. I don’t want to do the 203K. Is there a way to ask the lenders to proceed with the financing and allow us to replace the missing pipes, water meter and put on a new roof (it is not leaking) after closing. Could our lawyer get involved, would it matter if she did get involved since it is the lenders money?

    • The lawyer can do anything as no one did anything wrong. HUD is pretty clear on how they sell homes and the lender and your agent should have known there would be problems well before this point. A HUD 203B loan might work if HUD says it will go FHA with a repair escrow, but the repairs would have to be under $5,000. You do not have to use a 203k contractor with that loan. Otherwise it is up to your lender on if they want to escrow any repairs after closing.

  37. Hello Mark,
    We are looking to buy HUD house and put to deed mother and a son -18 years old. only son will leave in the house after rehub is done.
    is it all legal in case only one owner (per singed deed) will be an occupant?

    Thanks beforehand.

  38. Hello,

    HUD just listed a home that I’ve been eyeing for a while. It was foreclosed over two years ago and recently the bank tried auctioning the home cash-only to no avail. Then all of a sudden I noticed in the county web site that the home ownership had been transferred from the bank to HUD. Sure enough, the house listed on HUD within the next week or so. It is currently in the initial 10-day period open only to owner occupants (which I would be). The home has not been listed on MLS and isn’t listed on any local real estate websites so unless potential owner-occupants had been paying very close attention they won’t know about it (there has not been a HUD home for sale in this town in at least the last 6 months ). HUD is listing the house for below market value but it is a pretty competitive real estate market here so I already bid above the list price (enough that with them paying closing and agents, it is still above the listing).

    My question is: at the end of the 10-day period, how often would HUD keep the bidding open if the bidders bid above the list price. I’m thinking that after the blind period they might keep it open just to instigate a bidding war. It’s friday and the bidding period ends monday and it still isn’t on MLS so I’m hoping the brief silent listing is going to help me.

    My second question is: do they ever decide to extend bidding beyond the owner-occupied bidding period in the hopes of getting investors – even in cases where they have bids from owner-occupants above the list price?

    If I win this 10-day period, how safe is my bid? Do I get close to market value and potentially spend a lot more money so they don’t keep the bidding open?

    • HUD accepts bids right away if it is a high enough price. THey do not extend the listing to get investors. Once a bid is accepted no one else can bid.

  39. A friend has accepted a contract job and needs to buy a house in area the new job is in. They already have a home in another state. Can they buy as an owner occupant?

  40. Hi Mark,
    Iam going to bid on a HUD home and offer more than the asking price. If I am out bid by another offer is there clause in the contract that I can add that will allow HUD to give me opportunity to counter the highest offer presented.

  41. Hi Mark,
    We have had our offer accepted by HUD on Tuesday, July 5th. There were some problems with them not accepting a personal check for the EMD which they didn’t notify us about until Monday, July 18th. Tuesday, July 19th I got the $1000 EMD back and got a cashiers check for that $1000 (Which HUD requested). I know it is only Friday, July 22nd, but we still have not gotten any word back from HUD and still haven’t gotten the Seller Signed Documents. Does it take 7-14 days from the date of the correction to get that?
    Secondly, I read in your article that HUD needs to send over a paper for me to get utilities turned on for the inspection. I have called all utilities (City Water and Consumers) and told them it was a HUD home and they all said that I did not need that to get the utilities turned on. My realtor is not very familiar with buying HUD homes (I know, MY MISTAKE), so when I asked him about it, he doesn’t have much of an answer. And when I google it, it gives me numerous answers. I am also confused as to why we have to send the inspection papers to HUD if they do not require an inspection to be done? Can you please explain the inspection process to me in better detail?
    Also, the HUD agent we are buying the house from insured that the house is approved for FHA. When we went to go look at the house there is small water damage on living room floor, which to my understanding FHA will flag. If I am not doing a 203k loan, and HUD is not doing any repairs, and I am not allowed to make repairs before the house is closed, what am I to do with the flooring if I can’t close until it is fixed, and cant fix it until it is closed?

    • Hi, first HUD is very clear in all the paperwork you sign that earnest money must be certified funds. Your agent should have caught that in the email he is sent from HUD with specific instructions and in the documents you sign and send to HUD.

      If it has been that long, have your agent check with the HUD listing broker. You may need to bid again on the property. Usually HUD will give you about 48 hours to get the earnest money into them if you make a mistake. In my experience HUD has always notified the buyers agent and listing agent within 24 hours of needing anything corrected.

      HUD requires that form be used to turn on utilities if you want an inspection. You do not have to do one. The form is sent to you with the signed docs from HUD.

      HUD allows repairs under $5,000 to be escrowed and fixed after closing. I think you need to find an agent who knows about HUD if you want to buy a HUD home. He should know about all of this.

  42. My realtor submitted a bid on Friday and it still says pending review almost a week later. According to the hud homesite page the bid submission deadline ends daily at midnight and the listing period deadline is for 16 more days. When will we most likely know something about our bid? Also I was under the impression that if they were accepting bids daily that they would be reviewed the next business day, is that not true and if not how frequently do they review bids?

    • Do you mean it says pending review on hudhomestore listing? It always says that. Your agent has to login and view their bid history to see the status of your bid. Most likely they did not accept it.

  43. Hi, I recently bid on a home above the listing amount and my bid was accepted. I begin to review the contract and it clearly states that I can request HUD to pay 3% of closing costs, but if I leave the line item blank they will pay zero. I asked my local agent about it and i indicted that I would like to request it since I did bid over the list amount. He told me that if I requested it my contract would not get executed by seller. I asked why is this listed in paperwork as an option if it will just be rejected. He says it’s the way it is. I’m frustrated because I signed it and requested zero and provided the 1k in Earnest Money and now I’m reading more about the process and it appears to not be the case. Furthermore, he made it very clear that if my inspector finds anything that that is a significant problem I can get my earnest money. This was my first time bidding on a HUD home and I love the home and I’ve acted in good faith the whole way but not sure if I’m dealing with someone who is completely legitimate.

    • You have to ask for those closing costs when you bid, not after HUD accepts your bid. Your agent is right that HUD would reject your offer. That is like offering $100,000 to a seller, having them accept it and then making the offer $97,000 when you sign the docs. HUD accepts offers based on the net price to them, which includes any closing costs you ask for.

  44. I placed a bid on a HUD home on a Thursday and my bid was accepted on Friday. The paperwork was overnighted on Friday and they informed my realtor today , Monday, it would be processed in the next 48 hours. Is there a way at this point for me to cancel/retract my bid?

    • Yes, just have your agent tell HUD that you are cancelling your bid and won’t be sending in the contract

  45. In your article, you said “HUD requires the purchaser’s social security, tax identification, or EIN number in order to submit the bid.”

    But I am looking at their “Instructions For Sales Contract” form, which has an OMB number, and starts off with the “Public reporting burden” and “Privacy Act Statement” that is typical for government forms. At the end of that, it says this:

    “It is mandatory that you provide all of the requested information, including all SSN(s), for you and all other household members age six years and older. Failure to provide SSN(S) and required documents will result in a delay or loss of assistance payments.”

    At best, this is deceptive language designed to coerce people into doing something they would have absolutely refused to do just 50 years ago. And what makes it really irritating is that Americans are NOT required to have an SSN. Are we entering into that Biblical prophesy where you “cannot buy sell or trade without The Number”? How can they say it is “mandatory” to provide information that was “requested”? Can’t they just say “We demand this information”? Isn’t it a form of discrimination to deny someone the right to buy a piece of property just because they aren’t enumerated in the government’s inventory database? And then the very next sentence on that form tells you it IS NOT REQUIRED. You just might face delay, or “loss of assistance payments”. If you don’t want “assistance payments”, or any other “benefit” from the government, just want to buy the property and be done with it, then they have no reason whatsoever to “require” a SSN. Especially since people are not required to have an SSN.

    Interestingly, this is the same trickery/fraud/deception that is used by banks when opening an account. The patriot act DOES NOT require banks to obtain an SSN, but the banks slip SSN in as if it is in the law’s language. It is still illegal to require someone to divulge their SSN, unless you are seeking some government funding of whatever form.

    Worse than all that, it says right in their “Privacy Act Statement” that they will use your SSN to INVESTIGATE YOU – passing the number on to IRS and local law enforcement and prosecutors for “civil, criminal, or regulatory investigators and/or prosecutors”.

    When did buying a house become a tool for spying?? It angers me that this kind of overreaching violations of 4th Amendment protections goes unquestioned by the masses. It really angers me that people treat this kind of fraud and deception as normal and acceptable. Nobody questions the SSN being used as “identification” anymore. It used to say right on the card that it was ILLEGAL to use the SSN as an identification number. Short memory people. It’s not really okay that this is happening.

    And people like the author of this article put themselves in the position of supporting the government’s illegal encroachments, rather than helping people fight against these little things. In political jargon, this author would be considered a “useful idiot” for supporting this sort of government propaganda and encroachment into our rights and liberties.

    • HUD is the seller of the home and they have decided in order to sell their houses they will require these things to be done. They are not requiring it on every house, and if you don’t want to give that information there are plenty of other houses for sale.

      Calling me a useful idiot for not fighting against the government without stating what you have done, seems a bit of a stretch. After all it is quite easy to post a comment on a blog. HUD has a 1-800 number you can call if you want to tell them directly how you feel.

  46. There is a HUD house in my neighborhood that was sold in November 2015. The owner has not made any repairs, has people in and out of the place constantly and appears to be running an auto repair business out of his garage. There are nine or more vehicles filling the cul de sac at any given time. He has a tarp on the roof and I heard the house is full of mold but I don’t know that for fact. Do we as neighbors have any recourse?

  47. So hud only pays 3 percent closing yes? So would I have to pay the rest of the 3 percent plus another 3 for commission fees

  48. Great article, I recently submitted a bid on a Thursday and Friday I did not receive a response from HUD. Does HUD only counter offer to the highest bidder from the previous day or do they counter offer to all bidders that bid the previous day?

    • SOmetimes they do not counter anyone if the bids are not close enough to the price they are willing to take. There is no set policy for how they counter. It is not a true counter since it is only a notice of what they will accept on your next bid.

  49. Hello, the HUD property was placed back on the HUDHOMESTORE website for one day which was a Sunday. The listing said it was to expire at midnight sunday night. I was able to place a bid before it closed on Sunday. Monday morning at around 11am the listing was still on HUDHOMESTORE so I increased my bid a few thousand dollars. My bid was rejected and the winning bid was a lower net to HUD than mine. How could this happen? Is the asset manager at fault here?
    thank you,

    • Are you sure it was a lower net? The bids HUD places on their website are minus commissions and any closing costs asked for. When was the bid accepted? If they accepted a bid on that Monday they would have only reviewed bids from the previous day and they increased bid placed on Monday would not have been considered.

  50. Hi Mark. Me and my girlfriend just won a hud house and were was in the process of setting up the inspection and was gonna turn on the water and all and come to find out there is over 1,000 dollars owe in water and sweage and we was informed that we can pay it or they might put a lien on the house. so my question is are we stuck with this or will hud pay it or how that works. it was never listed anywhere about the house. we really want this house but we refuse to pay someone elses bill like that. if it was 100 bucks or something we would but not 1,000 so are we screwed and just need to back out of the deal.

  51. 1. If the repair escrow can not go above 5k+10% and during our inspection the home needs more than $5500 worth of repairs, can we then switch to a 203k to cover the cost? 2. Since HUD doesnt typically cover closing cost, is it better to bid the additional 5/6k, then ask for the closing cost to be covered? Lastly, 3. What are the benefits of using the escrow money to make repairs vs. 203k?

    • Yes, you can switch to 203k, but they have to be repairs required by FHA loan, not just repairs. It is much easier and cheaper to do a regular FHA loan than a 203k

  52. mark – Lindsay Isner here again! One last question!! Even though that line is in the contract we can back out? and also does it matter that the house is an “AS IS” sale?

  53. Me and a family member are co- buying a HUD house , owner – occupant. clause. He will be living there, I am being added because he can not get the loan and we are paying cash for it.The home needs a tremendous amount of work before he can even move into. With the one year clause- do we have to the work completed and the home livable by a certain time frame. We are going to try and do the majority ourselves to save cost. It could take 5-6 months.

  54. HI mark !

    I literally went thorough and read ALL of the above questions and answers and still did not find mine! praying to god you can help! I am panicked!

    Put an offer in on a HUD uninsured home and it was accepted. Had 2 days to get all the attached paperwork signed, all in originals and overnighted to them. We frantically got home and reviewed the documents and one particular document scared the crap out of us! My fiancé and i hesitated on signing the paperwork so many times because one of the letters states that “inspection does not cancel the sale of the home”. We debated for the entire night and next day on what to do! Usually the inspection is what you get done to make sure everything is okay to move forward with! Does this mean that if the inspection fails we are stuck with the house? We contacted the attorney that was given to us and asked him the same question. He stated that HUD cannot “force” you to buy a home. We might lose our inspection fee, and earnest money deposit but that’s it. We are TOTALLY fine with losing our deposit and inspection money. But if the inspection ends up being thousands of dollars in repairs can we revoke the contract and back out? Please advise as soon as possible! Losing sleep over this!

  55. I would like to know the source of your information about getting inspection fees reimbursed please. I figured they would not be reimbursable, but my wife would like something official to back it up. Thanks, wonderful information here!

  56. Mark, I’m an investor and have been asked if I would lend (mortgage?), provide financing for a HUD home. My concern is that if the owner-occupant fell behind on payments, I’m not sure if or how I would take ownership of the property. Can you explain how it would be possible and legitimate? I don’t want to get in trouble with HUD.

    • You would foreclose on the home like any lender would. As the lender you would not be violating owner occupant laws by foreclosing.

  57. Hi, my wife is a full time teacher and we are thinking about buying a property through the Good Neighbor Next Door Program. I wanted to know if we have to be preapproved for the full listing price of just the discounted 50%. For example, if the home is for 600k can I be preapproved for only 300k or do I still require the full 600k preapproval? We will definitely be owner occupants for longer than 3 years. The reason I ask is homes in Hawaii are expensive and everyone knows income is not getting any higher here to match the cost of living. Also, what is the required distance proximity from work? I thought it was based on as long as kids who live in the house neighborhood goes to the same school my wife is teaching in. I ask because O’ahu is such a small island and she works for a private preschool with many centers around the island. For sure we won’t find any hud GNND homes in Honolulu area where she works but we can find homes in nearby cities that is 15+ miles away and closer to other centers who is under the same private school she works for. Thank you in advance and so sorry for the multiple questions.

    • Just so you know very few HUD homes are in the GNND program. Most likely it will be very hard to find any in your entire state. You only have to be approved for the amount you pay. I believe you have to live within 15 miles of where the person wo qualifies works.

  58. I am in the middle of trying to purchase a HUD home but the listing agent says once it goes to MLS it is no longer eligible for the Good Neighbor Next Door Program. Is this accurate?

  59. Hi Mark,
    Thanks for a very informative article. I have a situation to ask for your opinion. My friend just bought an HUD home by cash and I lend him a half of it’s cost. The escrow is just closed. I did not think about any protection for my lending amount of money until now. Is it ok for me to add my name into the deed? And if yes, how should I do it? Or if no, do you have any idea that i can do to make sure my money is protected?
    Thank you very much,

      • Could you further explain? We are trying to get a personal investor, however he wants his name on the deed (understandable) in case something goes wrong…… How can we do this?

        • You can have whoever you want on the deed, but at least one person must live in the home for a year if you bid as an owner occupant.

  60. I put a bid in on a HUD property recently. I went to look at it with a contractor. The house is totally trashed – unlivable! It is FHA insured, and eligible for 203K. I looked at the PCR and it only had about 4 items on it – and all noted OK. Out of curiosity I looked at a PCR on another property in a totally different neighborhood, and it noted windows, paint, flooring, and many other things as being in need of repair. So, I’m thinking the HUD PCR on the one I looked at with the contractor is a fraud – maybe it wasn’t even done. The only possible reason I can think of for the misleading report is that this property is in a much more desirable neighborhood than all the other properties/listings and this is a HUD scheme to try and justify its high listing price. Why am I wrong? You stated in the video that the HUD properties don’t go for less that 85 percent of list price. My bid was for a lot less than that. I may not get the house but if I do it will be gutted and gently brought back to life – and I won’t go broke doing it. Your video was very helpful but some of the things you brought up about HUD just reinforced ideas that I already have about government bureaucrats and how far they will go to make themselves look useful.

    • Hi David, HUDs system is set up to make everything as fair as possible. The PCR is done by a HUD inspector and they are all different. The PCR is property condition report and only mentions major items like HVAC, plumbing, sewer, roof, electrical and a few other items. A PCR would not mention anything about flooring, paint or windows. You may have been looking at something else besides the PCR. HUD gets much more detailed inspeciton reports before a HUD home is listed that show items that have to be repaired before listing (dangers). That is the HIPR. That is not given to the public and should not have been viewable if that is what you saw. It is not given to the public because some of those items may be fixed before list.

      HUD does not price homes based on neighborhoods, they use appraisers. Believe me they do not have time to look at neighborhoods and decide if one home should be priced higher than another. Like I said HUD uses an appraiser and they base price from that. Sometimes HUDs go for less than 85% in certain circumstances. After 30 to 45 days they will reduce the price if it has not gone under contract. HUDs system is actually extremely fair and one of the better run gov agencies if you ask me.

  61. Hello. I’m wondering if you have an email address I can write you at? I would like to share my story about my attempted HUD home purchase, as I feel the listing agent had a hand in my contract abruptly being cancelled so the sale could go to his client, the bidder below me! Thank you

  62. Where do I find the provisions exempting the buyer from applying for approval from the condo home owner association? (HOA’s right to reject a buyer is waived when seller is HUD for their REO properties.)

  63. My agent just put in a bid on a CO Hud home. I’m understanding they wait until the close of the owner/occupant timeline to award a bid? What if we bid full asking price? Do they award sooner, or we still have to wait?

  64. I have a question for you. I bought a HUD home with cash for my daughter to live in. We got the home for 40k. We got the money from my home’s equity line of credit. Since the purchase, I found out that my equity line of credit’s timeline will come to an end around the middle of 2016, therefore leaving us to reopen or renew our line of credit. I was wondering we could use our daughter’s property, the HUD house, as the new line of credit in lieu of our home? Can we open up a Line of Credit on the HUD home? She has lived there for about 6 months now. I’m just not sure if this can be an option or not. We’d really like to open up a line of credit on the HUD home so that we can free our home from any obligation down the road. Please advise…….

  65. I am bidding on an owner occupant. If I bid listed price and another bitter matches or outbids me will I be able to counter? Is it wise to bid over listed if there is still value their?

  66. Hello Mark – great article, thanks for all the information contained. I have lived in a home purchased from HUD for 7 years with no issues, and another property recently came up for sale in my area that I checked out with my realtor, and realized very quickly that I would want to put an offer on, being a “one of a kind” property. I would plan on selling/leasing my current property and moving into the new home as an owner-occupant, as it was also for sale by HUD.

    Long story short, it has been a trying process this time around. I put my offer in during the “owner-occupant” phase with no issues. After the initial bidding period ended, the listing was taken down, and then the home re-listed on their website again for 3 days. HUD explained that as a “system glitch”. HUD then sent an automated response to my realtor that my bid was accepted as the winning offer, but was then quickly followed by “Oops, we made a mistake – you aren’t the winning offer, you are actually the backup offer”. They then proceeded to send another automated email to my realtor saying I was still the backup offer – this was also explained as a “system glitch” on their part. It took over 10 days after the bidding for HUD to post what the winning bid was for this property, even though it was accepted 3 days after the bidding period ended. My realtor then pointed out that the broker listed on the winning offer was a real-estate investment company from Wisconsin, and they also bid/won a 2nd home in the area as well, in southwest Ohio – this company’s website hasn’t been updated since 2012 and primarily talks about investment properties, rentals, helping sell foreclosed properties etc. as services offered on their website, listing only the Milwaukee metropolitan area as their service area. I checked all other states in the country (including Wisconsin) and they have no other accepted bids in the entire country currently for HUD properties except for these two homes in my area, 400 miles away from their listed PO Box on their contact information.

    While the “glitches” my realtor and I have dealt with thus far in the bidding process have been frustrating, my new concern now is that an investor has possibly bid on this house in the restricted phase meant for non-profits, gov. agencies and owner-occupants like myself. My realtor has asked the listing realtor for the property and HUD customer service contact about these concerns, and they simply respond that the winning bidder is an “owner occupant”, with no explanation on the out-of-state investment broker being represented. Do I have any recourse to complain about this prior to the winning bidder closing on the property? What options do I have to voice my concerns, if any? I am currently listed as a backup bid for this property and don’t want to ruin my chances of buying this home if this bid winds up being bogus and falling through. Thanks in advance for your advice!

    • Hi, I have never heard of HUD having system glitches like that. That sounds really weird. There is a 1-800 number on the HUD website that you can call into to report prohibited practices like an investor buying in the owner occupied period.

      As far as the winning bid being posted that is a normal time frame. HUD does not post that information until the contract is signed by all parties which can take a few days to over a week.

  67. Hi my question is we have been approved to purchase a hud home and are ready to close but have been told hud does not have a clear title to home how long does it take for hud to provide a clear title as we are anxious to close and move in thank you

  68. We have put a bid in and been accepted for a hud home bank has already approved loan and we find out hud does not have a clear title on home my quertion is how long does it take for hud to provide a clear title as we are ready to close

  69. Hello Mark. I have been doing research on HUD home buying process and came across your great article on HUD homes and the bidding/purchasing process for o/o. I have just a couple questions if you have time to answer.
    We contacted the listing broker of a HUD home we are interested in. She was unable to show us the property so she sent a brand new realtor on her team that just became licensed last week. He, we have realized, has very little knowledge on how HUD process works and we ended up rushing that day (Friday) to submit a bid with the impression from him we would hear immediately back from the asset manager if the bid was accepted and then negotiate from there. So, of course we started with our bottom dollar. Now I understand that is not at all how this works and bidding so low potentially a bad move if we really want the property. We bid as O/O and the home is insured. The 10 day exclusive bidding period ends tonight at midnight but I am unclear if that is extended one day or three days since today is a holiday. Do you know? I cannot reach the listing agent. I would like to have this gentleman modify our bid before this initial bidding period is up but he acts as thought that is not a good idea. He spelled our names incorrectly on the bidding site as well as checked “no” to using the offer as a back up bid. I would like to change these things and increase our purchase price so that the net amount looks better. Please advise. Thank you in advance.

  70. Hi Mark,
    I am contacting you in regards to my primary residence, which I
    purchased in 2010, and have now lived in the house for 5 years. Recently,
    I went to put my house on the market and my realtor inquired as to where the third
    bedroom and second bathroom were located as according to the county property
    records, the house was only showing 2 bedrooms and 1 bathroom. Upon further
    research, I was able to verify that this was in fact true and that the addition of the
    master bedroom and master bathroom was a result of the conversion of the garage
    by a previous owner, but the addition was not permitted and therefore did not
    legally exist. This week, I have found substantial termite damage to the unpermitted
    addition which has made the master bedroom uninhabitable and a safety risk. I had
    an inspection done at the time of purchase which mentioned previous
    damage in the basement of the main house. The appraisal mentions nothing of
    termite damage, yet the minor damage that was evident at the time is clearly visible
    to the naked eye in the basement. The inspection report is no longer available for
    printing and/or downloading, but the company advised that they would be able to
    disclose information if needed via phone or email. The inspector mentioned at the time that the house had been treated
    for termites, a fact that pest inspectors verified this week when they came back to
    the house. On the sellers disclosure, the seller specifically marked NO on the option
    for “ Have any substantial additions or alterations been made without a required
    building permit” as well as “Is there any damage due to wind, flood, termites, or
    rodents” and “Have any improvements been treated for wood destroying insects.”
    Please see the attached sellers disclosure that is attached. A copy of the inspection
    was provided to myself, the sellers agent, as well as my agent, but no discrepancies
    were referred to me at the time in regards to the sellers disclosure.
    The listing showed the house as a 3 bedroom, 2 bathroom house that has 1,272 sq ft
    of living space. The appraisal also shows it as a 3 bedroom, 2 bathroom house, but
    the attached county property record shows it as 912 sq feet of living space and only
    2 bedrooms, 1 bathroom. The county property record also mentions the main
    garage. This seems to be correct, as the next door neighbor has the same house in a
    reversed floorplan and it too is approximately 912 sq feet of living space, with no
    garage. Note: On page 1 of the appraisal, it states the lot size as 40×132 per
    (Assessor’s Office) which shows proof that the appraiser did in fact review the
    property record card, but neglected to verify if the addition was permitted and in
    turn admissible as living sq footage in the appraisal. Inidanaplois Code Enforcement states no permits were ever pulled for
    the conversion of the garage into living space. In addition, no comps were provided
    for either of the following: 2 bedrooms, 1 bathroom or homes with unpermitted
    additions that would have shown comparable values for this home accurately.
    The appraisal states the roof is newer, and per the sellers disclosure it was only 3
    years old. Recently we had roofers come out to provide an estimate and they were
    shocked as to how the roof ever passed inspection/appraisal due to the horrible

    what can I do or what would FAH/HUD do for me

    • I don’t think FHA or HUD will do anything. The only recourse would most likely be suing the previous owners, but so much time has gone by it may be tough proving it happened before you bought it. The question also pops up if the previous owners did the addition or treated for termites or if that happened before they owned it

    • Was this a HUD home you bought? If so HUD is very clear that they make no guarantees to condition and they would not have been the ones to make the addition or treat for termites. But, HUD also does not fill out property disclosures.

  71. Is there a statute of limitation about not ever living in a hud home after it has been purchased. It has been almost 5 years since the house was purchased for another person not the home owner and they want to evict them.

    • AS an owner occupant you have to live in the house for one year. But, that is a HUD rule and not really a local guideline for evictions. You would need another valid reason to evict someone.

  72. Hi Mark, I recently made a HUD purchase in FL with the intention on living there as owner occupied. My wife was going to work at a nearby location to the home. She has not worked in 10 months and Finding a job nearby the HUD home has proven difficult. She recently found a job near our current house. So obviously plans need to change, but what can I do now? The HUD home closed 3 weeks ago and we have started to make repairs already. We have no intention on flipping this home never did. Can I file my homestead on this property and actually live there some of the time and stay with my wife the rest of the time. Does HUD actually come by the home and check on my living status?

    • The requirements are that someone on the deed lives there at least 50 percent of the time. HUD probably will not check, but they might. It is possible HUD will let you out of the requirement due to job changes.

  73. Hello, I am a new agent and I have an investor lookin to buy a HUD home.The property cannot be purchased as an investor home. How long it usually takes for the home in case it’s not sold as owner occupied to be listed as investing home?

  74. Hi Mark

    Such a wonderful article with a lot of information. I learned a bunch from your website. I searched the HUD store and actually in love with 1 property in west suburb of Chicago. Quick question, how can i find a registered HUD agent so i can bid and buy this property?

    • Most agents should be registered with HUD. You can work with the listing agent or ask friends and family wo they use and is good.

  75. Hi Mark,

    I’m currently in a GNND home and have surpassed the 3 year requirement. Can I sell, rent for a year, and buy another GNND home? I can’t to find any info on the HUD website about this.

    • You can sell it or rent it after living there 3 years. To be honest I don’t know if you could buy another one. It would be tough to find another that is for sure.

  76. We are first time home-buyers and have have an accepted contract on a HUD house. We are currently in our 15 day inspection period, but have run into obstacle after obstacle trying to get the utilities turned on to even complete the inspection. The county had to approve the utilities were safe to turn on and make note of this in their system before the power company would even help us. Now, the power company says it will take 5-7 more days to get the power turned on. We’ve called around and been escalated and have been told there is no way to expedite this process. Also, the property preservation company has been minimally responsive and rude the one time we did speak with them. We are so willing to do what we need to, but we’re running out of time. Is there a way to get an extension on the inspection period?

    • Have your agent explain to HUD that the utilities can be turned on in the 15 days and have him be specific with dates on why. HUD might grant an extension.

  77. Hello, thank you for the info, I am going to be a first time home buyer. I have been requesting information and watching this one property for a year(maybe longer), and it has been HUD owned for 1+ yrs now. It is not listed in the HUDstore either. I just want a little lead on whom there is to talk to about tittle issues & getting a bid process going in the near future.

  78. I am looking for my first home and I am a contractor. I am looking for one with some repairs. I am also looking to get into real estate investing. If I buy a hud home and I stay in this home for 1 year from purchase and complete any repairs can I rent this property out and move out?

  79. Hi Mark. I have a questions regarding investors who bid on HUD homes. I am 23, looking to purchase my very first home to live in for the next several years at least. I had been keeping my eye on a foreclosed property (in very good condition) in the neighborhood where I’m currently renting. After some research, I found that it was a HUD home that would be going on the market in the next few months. I set alerts on 4+ real estate websites and checked every day. After a month of waiting, I took my real estate agent to look at it, and we met a man who said he had just purchased it and refused to answer our questions about whether or not he was an investor. This property was never listed, and he ended up selling it a month later for a $20,000 profit. I want to know how he was able to do this and how I can turn him in to HUD. Thanks!

    • Hi Molly, You can’t buy a HUD home before it is listed unless it is a non profit or city entity. It is possible that he bid on it at the foreclosure sale before it became a foreclosure?

  80. Hi Mark! First I want to start out by commending you for taking the time to share your extensive knowledge with HUD homes. I applaud you.

    Second, I had a question for you. I searched through the above questions, but did not see an answer to mine. At least I don’t think I saw one!

    We bid and won on a HUD home. We did the 2 day utility turn on, had the home inspection done at that time. No surprises there. We paid a title company to do the title search. It has come back that HUD needs to do a judicial deed. I have looked up judicial deed etc. and I am just confused. We now have to file an extension (thank gosh HUD is not charging us). We also have to submit again proof of funds (we are buying the house cash). I was hoping you could shed some light on the judicial deed and also about how long this process will take. I am afraid I am not a patient person and am really wanting to close on the house. Thank you for any and all information.


    • Hi Susan, It sounds like you are in a state that has judicial foreclosures and to be honest I am not very familiar with how those work with HUD. I think the title company would have a better idea of what is involved and how long it will take.

  81. If I place a bid on a HUD home as “cash” or with an approval from a hard money lender, am I bound to close with cash or hard money? Can I then apply for and close with a 203k loan instead? (Basically, after an offer does HUD care where the money comes from as long as I can close?) Also, if HUD gives less time to close for cash deals, do hard money loans get the same time to close as cash deals or as financed deals?

    • The first issue is hard money is usually only for investors and 203k is only for owner occupants. You can’t switch from investor to owner occupant with HUD. You can change financing but have to get it approved by HUD. If you used a proof of funds letter it would be considered cash and a pre qual letter financed.

  82. We made an offer on a hud home. Our offer was accepted. The lender our real estate agent us to gave us false information ended up denying us. I found another lender would approve us with a conventional loan but it’ll us a couple to get approved because my fiance just switched from part to full time. Today is our 15 day deadline get earnest money back. We still want the house, but our real estate agent is not our side this sale. If she already put the denial letter the one lender there still a way we can contact hud tell we want the house througha different lender but it’ll take 2 weeks? There were several other offers this house I’m afraid we’re going lose out on the we really want because our agent has messed a lot of things up and the original lender denied us.

    • Hi Rachel, You can get an extension from HUD for 15 days, but it will cost you money to do so. I think they charge from $150 to $375 depending on the price of the house.

  83. I’m in the process of buying a HUD home, I applied for a FHA 203k loan, my general contractor gave me a Bid and told me the repairs to pass inpection would be $3k. What to do now? Can I switch to FHA 203b or do more renovations and stay with FHA203k loan. My main goal its to get a better deal on my loan spending as less as I can. Thank you.

    • Hi Alex, Did HUD say it will qualify for 203b or that it had to be 203k? If HUD said it won’t go 203b then you probably can’t switch. You can do a 203k with 3k, but as you said it is a much more expensive loan.

  84. Hi. If your bid is accepted, how long before you need to give the earnest money? I think this house qualifies for the $100 down payment program but I was told it will probably be about $1000 needed. Why? This is the last day for bids, so, I guess I’ll know something in a couple of days?

    • Even with the $100 down, you still have to pay the full earnest money amount. The $100 down does not mean $100 out of pocket, but $100 down payment which can be confusing. I know they got rid of that program in my area a long time ago.

  85. I placed a bid on a hud home and we won. We ended up finding out it was under a lein and after having to file 1 extension, the lein was released. The problem is it wasn’t in time for the second deadline. The deadline is April 26th. We filed for another extension last week but haven’t heard anything back. Our paperwork is with underwriters now. We will have everything by Thursday. Will they grant the 2nd extension? The lein wasn’t discovered until after our company did the title search?

  86. Hello, I have a question that I’m hoping you can answer. Placed a bid on a HUD home and they accepted. Viewed the property twice, but with no utilities the basement was hard to look over well. There were photos of the water heater and furnace anyways. The property condition report listed a small leak by the basement toilet and said it failed the pressure test. No big deal. Now we found out the copper plumbing was stolen from the basement after being listed and the copper tube for the a/c was cut and stolen as well. The property needs about $700 in plumbing and a new a/c. Can we ask for any money of purchase price? This was not listed in the condition report and I’m not sure the management company has fully acknowledged it happened. What are the chances of getting $1,000 off the purchase and how do we go about doing that? Our agent is very good but completely in the dark on HUDs when it comes to something like this.

    • Hi Adam, You can ask HUD for a credit if the stuff was stolen after your contract was accepted. It is up to HUD to decide how much and usually it is not quite as much as it all costs to replace. Have your agent contact the listing agent.

  87. Hi my husband and I bid and won the bid on a home built 6 years ago. It’s four bedroom 2800 square feet custom built home in a very high desired area in our town. The home in in a community with a HOA and to be honest I can’t believe a home in this community was even available. Although God knows I know hard times can happen to anyone I would of thought because of the desire for the area the sellers could of sold the home and paid their loan off. Okay let me get to what concerns me.
    1 HUD listed the price of the home about $80,000 to $100,000 less then other homes with the same or lower square footage , some homes are going for $80.000 more in the area and even on the same street are smaller without some of the things the home we bid on have like our home has a giant (I mean really big!) chef kitchen but the home going for $80,000 more has a tiny kitchen only 3 bedrooms and 2 bathrooms. Ours is four bedrooms , 500 square feet larger,giant kitchen and many other extras. This normally wouldn’t be a problem for anyone but I guess I’m thinking to good to be true? Our relator and loan officer both were very surprised we won the bid and even more surprised at what HuD listed this home for especially since it’s. A pretty new Exclusive brick home in a hard to get in area. We bid over the weekend on the last day it was opened before going to investors.

    2. The home was listed insured with no damage listed. The front room does have two pretty good size holes in the wall that will have to be fixed,(I’m guessing each around the size of a piece of writing paper.) There’s also two in the hall way and in one of the kids bedrooms there is small dents like they bounced a ball on the wall over and over, the holes in the hall is smaller then the ones in the front room and the ones in the kids rooms are small. All of the holes are very fix able and there’s no wires that we can see in any of the holes. Could this be why they’ve appraised it so low even though the rest of the home looks perfect and pretty much like a brand new home? Honestly it looks like they pulled a TV off the wall in the front room and like they punched two holes in the hallway , it looks like they took care of the rest of the home.

    With #2 could the holes in the wall make us fail inspection? This has me so worried I can almost get no sleep. We have already sent in our earnest money and paperwork, they sent back their signed paperwork and we are waiting on the home being unwitnerized, utilities turned on, inspection, appraisal and pest inspection. I could never ever dream of living in a home this nice and especially not dreamed of buying one! We made sure to get pre-approved on our home FHA loan before looking at homes. The underwriter already looked at our application and even gave us advice on how to get our credit up to where it needed to be , before we even looked at homes. We did what he requested and they had our credit reran and gave us the pre-approval So that should be good to go. Nothing has or should change from us before closing,

    In our area there’s four price ranges for homes and depending on which price range your in depends on which area and type of home your buying.

    1. Older homes that normally need a lot of work , mobile homes or homes in areas that most don’t desire to live

    2. Lower to middle , can find some nicer older homes that are updated. Normally under 2200 square feet, if you’re lucky you can find a older home that has a couple updates and more then 2200 square feet. Couple of new siding or double wide mobile homes with land in this price .This is the budget we had ( up to $225.000) We prayed for a newer home in a good area with the square footage we needed.( we are a large family) newer meaning we prayed for a home under 20 years old.

    3. Middle to higher class homes depending on the area. I live in a town outside of the large town in our state and nicer homes popcorn here. On market and off within days. We’ve been looking over 90 days and found if the home was nice it would be listed in #2 budget and bid up to #3 which is out of our budget.

    4. Where most of us wish we could live , you know like your home !LOL

    We have financing for a home in #2 however we’re purchasing a home in an area that has homes in #3 range. It’s blowing my mind. When I first seen this home online my husband and relator thought there was little to no chance we would win the bidding for the home especially since we was financed for $5000 under what Hud was asking and the home should appraise for a great deal more. There’s homes on the very street that’s sold for up to $100,000 more , they were smaller with less high end options/build ins etc. My kitchen looks a lot like the kitchen in the home you and your wife purchased for y’all’s home. Mine is not as impressive as of yours :p but it’s darn close and has the same open space with a giant Island that holds our dish washer and sink etc actually the kitchen has two islands , ones that’s GIANT like I mentioned one side has the dish washer and sink and the other side is a table for the kids to eat at.It’s so neat! The other island is just a smaller island to prepare food on, I believe. The kitchen is so big that the two islands don’t look out of place at all. It looks like it was built to use both of them and have lots and lots more space. The Counter space is out of this world. Can you tell I’m in love with my kitchen? If not, I am! It looks as if it could’ve came out of a magazine for their company!

    I keep reading how homes normally appraise for what the asking price is and I gotta be honest , I don’t understand even with the holes in the walls (no wires are exposed or can be seen and should be a simple fix) and since the home is only 5 , almost 6 years old and the builder is still building homes in other areas I should be able to find out exactly what color paint that they used and paint over the holes once they’re fixed. I mean Really could two appraisers , appraise it so much lower then other homes in the area by the same very popular builder are selling for? Even homes that are 15 years old by this builder and in the HOA are going for more than we are paying. I’m not complaining , I’m just really confused! If the appraiser we are paying comes back with the same appraisal I’m going to be even more confused because if we fixed the holes the home would look brand new. HUD says the is one of their home that is insured (makes me wonder if they never seen the holes?) but then again seeing they made sure not to show them in the pictures I guess they were aware of the holes. Is it true our appraisal will likely come back what Huds did? Even our Relator is scratching her head on this one and what it was priced.

    Our loan Officer and Relator both said this is the best deal they’ve ever seen especially , since it all looks brand new if you ignore the holes. The outside of the home, the yard, sprinkler system, all looks like a brand new home. Inside all looks brand new if you ignore the holes(and yes, I know one can’t ). I don’t know what I would do if our inspection failed. Our Relator says it shouldn’t since Hud said they appraised it and it’s listed under their insured and not unsecured or insured escrow.

    Okay I am rambling. I’m full of worry and concern being this is our first and will be our last home purchase and trust me. I’ll be happy here forever ,Before , I could only dream of living in a home this new/nice in this area.

    One thing did cross my mind though. When it comes to insurance how in the world can they insure the home for what’s comparable in the area when it’s appraised $80,000 to $100,000 less then what’s sold and is currently on the market? It’s appraised for a price that might get you one of the smaller homes (if new 1100,1400 square feet) or one of the older homes at or about 2000 square feet in the older /smaller part of the community.
    Our home is 2800 Sq.ft. 4 bed , 3 F bathroom home in the newer part of the community where the newer upgraded homes are near the private parks, ponds and walking trails. Our homes is one of the larger homes.

    If something happened to our home and if our insurance went by the selling appraisal that HUD listed we wouldn’t be able to purchase another home with the features ours has in the same area or honestly any area in our town for a home this nice. I’m guessing our appraisal will be magically around the same as HUDS asking price was. I’m not even worried that it won’t appraise for what we bid . We bid $5000 less than asking and asked for 3% for closing cost. Nobody except me expected for them to accept the bid because they couldn’t understand why it’s listed so low. I’m not sure why but I just knew they would accept the bid. I feel extremely blessed and confused at the same time.

    • Good for you! don’t worry about insurance it will based on the replacement value, not the appraisal. What type of financing are you getting? If you are doing FHA you should be able to escrow any repairs that come up as long as they are under $5000

  88. Hi Mark, How property taxes are calculated on a fixer upper property? By the way the information on your newsletter is great. Thank you.

  89. Question, what happend if during inspection we found a strctural damage on walls and roof, Can I renegotiate the price with HUD?

  90. Mark thank you for answering. Do you know how much you will end it up paying in total +- when dewinterizing a home with HUD (3,000 sqf 4bed/3bat) Also I will download your free report right now thank you.

    • Alex, a lot depends on the plumber or inspector. Some inspectors have no problem turning the water on and others will not. If you have a plumber do it; $50 to $150 depending on their hourly charges.

  91. Hello Mark, nice blog! If I’m correct HUD first asking price is based on their appraisal. Is that appraisal based on “as is” condition or the house in a perfect condition?

    • It used to be, now they say it may not be and they don’t disclose the appraisal. But I think the list price is usually pretty close. The appraisal is based on the as-is condition.

  92. My husband and I want to purchase a HUD home but it is not listed on the HUDhomestore website. When I spoke with a HUD representive he said it could take years for it to become available, why? He mentioned that possible hundreds of lenders may have attached themselves to it, what for? Normally I would think money but the information online says that HUD gets these homes from the banks so I don’t understand what the rep. was meaning. This home has been empty for years, it was on Zillow for over 8 years. It is a one bedroom, less than 700sq. ft. Then the rep. tells me to look it up everyday to see if it might sometime in the next unknowable years show up? We are already preapproved for a FHA 203(k) loan and grants. We want this home but don’t know what to do anymore we found a NAID broker but I don’t think he will want to be looking everyday for us, now what can we do about this?
    Thank You So Much, Susan Magnuson

    • Hi Susan, the problem with HUD homes before they are listed is the bank that gave the loan (wells fargo) has to bring the house through foreclosure, secure it, do the eviction etc. HUD has no control over that process until the property is then conveyed to them after the bank takes possession. For it to be conveyed to HUD the bank has to jump through hoops and get approval from HUD. The process can take months or even years in some cases depending on your state laws.

      Wells Fargo will not sell the home if it is going to HUD. If they did not give it to HUD you would still have to wait for them to list it on the MLS. In both cases HUD and Wells Fargo have bid periods and you could not buy it until it was on the market at least 5 days and up to 15 years depending on if you are an investor.

  93. Do you know if HUD homes can be purchased with a construction loan as long as one of the persons on the deed is o/o?

    If so, is that an offer that is likely to be accepted over a matching or higher bid with an FHA loan?

  94. Hey Mark,
    I recently bid on a Hud home and it was accepted. However my bid was $6000 more than the HUD appraisal. I was told that I shouldn’t get a second appraisal because my lender will use the lessor of the two. Is this something that you have dealt with before or is it lendor specific?Do you have any suggestions as to moving forward?

  95. Hi Mark,
    Thank you for all your very informative info! We put an offer in on a Hud home as O/O that was 92% of asking within a day of the listing and did mark it to be a back up. Now the home is on day 11 and says off the market and status says OBS. Should I just assume the house is now under contract and move on? If it comes back on by some chance, can I put in another higher offer ? Thanks much!

  96. Hi Mark,

    Can we make a cash offer contingent on the sale of our current home that is under contract, or do they want to see money in the bank at time of the offer?

  97. Hi Mark,

    My husband and I are interested in buying a HUD home. The home is actually my husband’s great-aunts previous home. She had a reverse mortgage on the home and passed away over 2 years ago. I have been told the home is now a HUD home and has been sitting vacant for some time. The home is not at all being taken care of and it is very sad. The home is not listed on the HUD website. Would it do any good to call and get info on it? Does it help at all to let them know we are relatives of the previous owner?

    Thanks for your help!


    • Hi, I am not sure HUD ever gets reverse mortgages. I know Fannie Mae did reverse mortgages. In any case the home will not be available to buy until it is listed with an agent. Have you checked to see if it went through foreclosure yet? It takes a long time on a reverse mortgage, because the lender has to give at least a year to the heirs to try and sell the home or pay off the loan. THen it has to go through foreclosure. It is not rare to see them vacant for years.

  98. Hi, I’m trying to buy my first home. I’m not financing and I have a total of 50k to spend. The house is listed at 55k on the HUD site and 20 days old. I’m confused what to bid, because I can’t go over the amount of 50k with the closing costs. I would like to pay lower, to have a bit more repair padding. I asked the agent I’m working with what the lowest bid HUD would potentially accept was, and he said 50k would be very unlikely to be accepted. Should I bother? I really like the home.

  99. Mark

    I am waiting for a hud home to go on the market. It was forclosed on 7/31/14 by jp morgan. I was waiting for them to list it, finally became tired of waiting and was told they are in the process of conveying the property to hud. When I call Hud they can’t seem to tell me anything about the property. As of now the property is vacant, it has been secured by a preservation company on behalf of chase bank, and the house is in good condion. My question is how long before hud lists the property for sale? Thanks

  100. Hi Mark – I have been waiting for a HUD house to go on the market for several months now. The tenants were finally evicted in December, 2014, the house has been padlocked and winterized and today there is a crew there removing he remaining contents. My understanding is the this house will be listed soon on for sale. I have been
    talking to my realtor about this house for months and already have spoken to my lender. My question to you is – Can I purchase this home as owner occupant with my name on the
    loan and list my name along with my sons name on the deed? This home is two doors down from our family home and I am purchasing it for my son. He will be the full time occupant.
    So my name on loan and mine and my sons name on the deed? Is that OK to do? Please advise. Thank You

  101. Hi, can you please help me and answer the following question; if I purchase a HUD home as owner occupied and lived there for over a year can I flip it and rent it after a year of living it or that’s illegal?? If no then can I at least sale it after a year of living in it as owner occ ? Please let me know, thanks for your time!!

  102. So we recently won a bid but when we went to clarify one thing before the contract was accepted we found out an issue. The property listed for 180,100. We offered 185,000 with 3% seller help to pretty much give then their asking price. We need a 203k program. Our mortgage person said at the last second that an addendum we signed off on saying any price above listing price which was the HUD appraisal price we have to pay as cash in addition to all other closing costs. They said we can go for an appraisal on our own that would have to be about 191,000 to try to get the the 97%(us paying 3% down payment) of the FHA amount to be the 185,000 but if it doesn’t we breached the addendum and would lose our initial good faith money. Why would FHA make you use the lesser of the appraisal value or purchase price? Especially with the 203k where you will be borrowing a lot more than the listing price or appraisal value. Feeling confused so thanks.

    • Hi John, HUD recently changed their policy and no longer give out appraisals. UNless this home was listed months ago this should not be an issue. ON every loan you will have to go by the lesser of the appraisal or purchase price. This prevents fraud and people trying to get loans for much more than a home is worth.

  103. hi,as an owner occupier do I have to transfer my homestead exemption in fl. to prove ownership,or do i just have to have my name on title, move in within 60 days and live there half the time?thanks mike

    • Hi Mike, I am not sure about Homestead laws in FL. That would be a question for local state officials. AS FAR AS hud you have to spend the majority of your time int he house, not half. HUD does not believe anyone can occupy two homes at once.

  104. So glad you are still responding on this thread. I have a unique situation. As an O/O I have won a bid and have an approved contract with HUD. The home was listed as Insured (NO ESCROW). We are going FHA backed financing. The HUD listing’s PCR stated all systems working. But after getting the paperwork in to turn on utilities for an inspection, we found out that the furnace needs to be replaced. A licensed HVAC expert says it can not be turned on. This property is in MN and it is winter. We can’t get our financing without an appraisal by our lender. Our lender can’t do an appraisal without an inspection. We cannot do our inspection without the water turned on. They cannot turn on the water without the furnace running. What do we do now? It’s my understanding that HUD will not replace it and without it we won’t qualify for FHA backed financing. Seems like a set up catch-22.

    • Hi Allie, HUD won’t fix anything, but since you are using FHA you can use a repair escrow. You will need two bids for the furnace repair/replacement and your lender can escrow the repair in a 203b loan. The water lines should have been air tested by hud and if they held pressure the lender should be okay with that test in a FHA situation.
      I am not sure why your lender would need the inspection done to order an appraisal. If your lender says they can’t do it, then they don’t know HUD homes very well.

  105. Hi Mark i have recently won a Hud bid—contract was signed and utilities were abt to be on for inspection until my realtor called and said “halt” he got a call that said Hud may not have the title “mobile home “! The home may have to be re-foreclosed?? He is waiting to hear back for someone. Its been 2 days now. I’m antsy & worried! I don’t understand and I do not want to lose this one. Can I hold them to contract? Any advice???

    • Hi Ericka,
      HUD is not who forecloses on homes; the lender that gave the original loan forecloses and then the property is conveyed to HUD. If there is a problem with the title the home may have to be reforeclosed on and it would be up to the lender to do it. It is out of HUDs hands and they would cancel your bid if they have to reforeclose. HUD contract is clear they can cancel for title issues.

  106. Mark, I’ve been informed that there is a 6% fee added onto the cost of a HUD home purchase price (the listing agent is claiming it is for the BUYER to pay closing costs). I’m confused as to the reasoning for this. I have bought HUD homes in the past (last one probably 15 years ago) and have never heard of this. I have built the extra $11,000 into my bid, but I’m wondering if in fact the 6% is for closing fees, or is there another more reasonable idea for this added 6% (I am buying cash as owner occupied).

    Thanks in advance.

    • Hi, the 6% is probably for the commission. It is similar to other house sales, but HUD words it a little differently. The listing agent always gets 3% on HUD listings unless they are in a special program like GNND. The buyers agent can get up to 3% of the commission as well. HUD prices their homes to take into consideration the commission and will accept a bid at list price with 6% for commissions, but if there are multiple bids HUD looks at the highest net to them. Technically HUD takes the highest net bid to them, which would be bid price minus commissions and any closing costs asked for.

      • Ah, so basically the buyer is paying the commission. Gotcha. Thanks for the quick reply. If you could indulge me, could you tell me the process of notifying HUD of items not listed on their repair escrow list (Yes, for this property they do list one. Though it is not even close to reasonable). The basement in this dwelling gets standing water (which they know nothing about). I would think that they may modify their price (as I have adjusted my bid). Do I notify the agent and trust that they will pass it along? Or do I notify HUD directly? OR, in your experience, would it even matter to HUD?

        • The seller is paying the commission, but they consider how much the commission is when deciding what offer to take. This would happen in a normal sale as well. if the buyers agent said they would take a 1% commission when 3% is being offered it gives the seller more money in their pocket than a similar offer with a 3% commission for buyers agent.

          It won’t matter to HUD. They get their price based off an appraisal from an appraiser and if it doesn’t sell they will lower the price every 30-45 days until it does it sell.

  107. Hi Mark…Thanks so much for your blog! We have an accepted bid on a HUD home on two acres, but we have title issues due to a mobile home discovered during title search on the second acre. Our lender wants the occupants of the trailer evicted and the trailer removed from the property before approving loan. have you ever heard of a situation like this before? Was HUD cooperative? Please help!

    • Hi david, I have never seen any part of a HUD occupied. If the people have to be evicted it could take months and HUD will probably cancel your contract and take the property off the market.

  108. “The only way a buyer can be considered owner occupied is if the person living in the home will be on the Deed when HUD sells the home. That occupant has to live in the home for at least a year and cannot buy anymore HUD homes as an owner occupant for two years”…. so Mark can the owner – occupant buyer have 4 other people on the title / deed and NOT be required to occupy? The intent is to help the owner occupant to own a house, but the four others on the deed is to help the buyer with the cash at closing, the fix-up cash needed, and the sharing in the value & benefits of the property. Is this allowed or consider to be a circumvention of the owner occupancy rules. The buyer does and want to buy a house, fix it up and maybe live there forever or at least live with the 1 year occupancy rule. This is an easy way to allow a buyer with no cash to be funded and get a fresh start.

  109. Daughter got the bid as owner occupant, realtor has sent the contract and earnest money in, but we(parents) were going to have to be cosigners on FHA or conventional pre approved loan thus our names would be on the deed. Can she change to USDA rural development loan without having to start over with HUD contract and bidding process? With USDA loan she could get loan in just her name but they do not do preapprovals.

  110. My husband and I are currently bidding on a hud house right now and we are worried on wether we offered too little or too much. Is it silly to over bid on a hud?

    • Hi Michelle,

      Just to share our experience, we bidded 20K over HUD’s listing price. This is after calculating what we can afford, considering the comps in the area, and the demand of homes in our area. We did the 20K over without knowing that if 2nd appraisal (required by lender) came in lower than our offer price, that we would have to pay the difference out of pocket! Appraisal report came in and it was the exact same amount as our offer price. Only you can judge what’s best for you especially considering your budget. Best of luck!

  111. We’ve got an executed contract on a HUD home. Our lender appraised it for about $30k more than our accepted offer, but they found a little wiring issue and have recommended a roof inspection. The lender told us to have the seller get the inspection and any repairs done. Neither of these issues are documented as affecting livability. What I don’t understand is how HUD can expect people to buy a house with issues that would make lenders not able to bite–are they really going to sit around until a cash offer? It’s not like this is exactly a dream home, and it’s still prices more than pocket change.

    Anyway, how would you expect this to go down? I imagine HUD will say, “Nope,” and then it will be back in the lender’s court. Is this kind of thing common?

    • HUD doesn’t do repairs. That is their national policy. They created the system to be the same for everyone on every state. If they start doing repairs then how do they decide what repairs they do and what they don’t? They can’t allow others to do repairs due to liability. If you are using FHA you can use a repair escrow to close. Otherwise any lender repairs won’t be done. Since you said these items aren’t even marked for livability then I think it is more of a lender issue than a HUD issue.

  112. Hi Mark,

    Thanks for you quick response. I appreciate the info.
    We too are concerned that investors are bidding on the o/o properties.
    The inventory at this price point is low and it seems the number of buyers is high.



  113. Hi Mark,
    I have been helping my daughter through the process of buying her first home.
    She has recently put in a bid of about 8% over asking price.
    Her offer was not accepted. My question is this, can a lower “cash” price beat a higher “financed” price?
    Or is it always the highest bid no matter what?
    We have put in many bids, but our agent says that the asset managers will choose cash over financed every time. Is that true? I didn’t think they were able to see other bids, only the highest.



    • Hi Paul, HUD only goes by the net price to them. They do not consider cash over financed deals. But if your daughter asked for closing costs to be paid by HUD that would lower the net. Sone banks will go for cash over a loan, but not hud.

  114. Mark,

    We are currently purchasing a HUD home and was told the lender who does our pre-approval letter must also be the lender who does our loan. The contract/sales package has already been submitted and we were told we cannot change lenders. Is this true?

          • Hi Mark,

            We’re in the Appraisal phase now, and we have been informed that the tree in the front yard caused a problem in the water main. HUD’s Utility Authorizing Agency is researching to resolve the matter. Listing agent is also aware. Is there a way HUD makes an exemption or share with the repair costs? Thanks.

          • It’s been a long 2 weeks, but for the sake of educating others, I wanted to give an update that yes Mark, you are right. We have to pay for the repair for the damage that the tree caused. Total is $600 (not too bad). I am praying this is the end of the repairs needed. This whole thing is making us not want to deal with HUD homes anymore in the future.

          • Mark, does this $600 repair mean we have to switch to a FHA 203K loan? We were advised by our lender that there’s a minimum $5000 repair costs if we go with FHA 203K. What are our other options?

        • Hi Mark,

          We got our appraisal last week. Thank goodness it was at the very same amount of our offer price! There are minor cosmetic damages noted (ie: nail holes, carpet soiled in certain areas) I’m kind of concerned about the built in microwave, as it said there’s a top portion missing and a crack on the glass front. I’m not sure if the appliances (built in microwave and gas range) are working either. Just like you said, we got the $600 repair for the tree on a FHA 203b. Today, Home inspection report on roof came in and minor repairs re: roof for $325 was suggested. Can we keep adding on the repair escrow as long as it’s less than $5000? How about when we move in and find out microwave and gas range don’t work properly? Can we include the replacements in the repair escrow?

          • Hi Mel, good to hear! Many times appraisals come in right at or just above contract price because the appraisers want to justify that contract price, but always come up with their own value. You can only add items onto the escrow that the lender requires to be fixed. It can only be done before closing, you can’t increase the escrow after you move in. And remember HUD is not paying the escrow, your loan is being increased to pay for those items.

  115. Mark, My daughter is a real estate agent and she told me because I am related to her she cannot sell me a hud home. Is this true and why? We are in the Strongsville Ohio area and the agent in her office that runs the account forbids it.

  116. Hello Mark, Nice article with great info in all the questions and answers. This is one I did not find in scrolling through all the questions: I am interested in buying a HUD home, AS AN INVESTOR, not owner occupied. It appears that this is possible, but it seems that the requirements are much different. Can you please elaborate what the requirements are? Also, what is the required down payment for an investor?

  117. Hello Mark,

    Thanks for your reply. No I’m not an investor just looking for a home for my family. I ended up withdrawing the bid and HUD is giving our earnest money back as we were able to provide an inspection report from the City Commissioner. Some of the electrical info was on the PCR but not the full scope. Thanks for all the info!

  118. Yes, you can lower your loan amount and increase your down payment or closing costs you want to pay. Just tell your agent and lender. Sellers typically pay commissions and if a buyer asks the seller to pay closing costs that comes out of the sellers pocket. The more closing costs you ask the seller to pay, the less money the seller gets. The seller raises the purchase price to make up for those closing costs.

    If the total purchase price HUD wants is 151k with 3k closing costs. Then they will take 148k if you decide to pay the 3k in cash at closing.

  119. The loan is based on my bid amount…which is the agreed upon purchase price right? So if the seller is suppose to pay the closing costs, why am I paying it in my loan? If I win the bid can I just pay these fees out of pocket to decrease my monthly payments? I received a counteroffer on the house I am pursuing. The offer was about 138000…after listing broker commission my realtors fee and closing cost the agreed upon purchase price is now about 151. After winning the bid can i instead pay the closing cost and realtor fees out of pocket in one whop versus over a 30 year monthly obligation? Hope this makes sense. Thanks.

  120. Hi. Why is the listing broker’s commission and the closing costs amounts included in the total purchase price due if the bid summary sheet says the seller will pay? Also, does the listing broker get 3% of the net amount to hud or the agreed purchase price? Thanks.

    • What I mean is why are those fees included in my 30 year loan amount if it says seller will pay…if it’s included in my loan isn’t that really the buyer will pay? :-/

    • The loan is based off your bid amount. HUD tells you the net price after commissions and closing costs because that is the number they look at when deciding what bid to accept. 3% of the purchase price.

  121. Hell Mark,

    After submitting 3 bids on this property HUD responded to our agent with the lowest they’d accept so we bid that plus one dollar. Our offer was accepted. We sent all of the documents and earnest money the same day the bid was accepted. I met the city at the property to do an inspection for the utilities as the city had concerns with turning the utilities on. The city denied the request for utilities to be turned on as the meter was tampered with in 2012 and the electric is not within code and they have no permits on file for all the work that was done. I cannot get a full inspection done on this property without the utilities on. But I cannot get the utilities turned on unless all of the repairs are made by a licensed electrician and then the city inspects the work. I am paying cash so I am on a strict budget with this. I want to revoke my bid and resubmit a lower one due to the extreme concerns the city has. Will I have to resubmit earnest money? Our realtor said she will ensure she gets our earnest money back. I don’t want to end up upside down in this! Thanks!

    • Are you an investor? If so you will not get your earnest money back. If you are an owner occupant and they PCR said the electric was okay you will get it back. If the PCR said the electric was damaged you may not get it back. Either way if you rebid you will have to resubmit earnest money if they accept your bid. But I doubt they will accept a lower bid since you already bid the minimum. Unless they drop the price soon.

  122. Hi I just had a question about a hud property. I put a bid in about two weeks ago on an asking price of 35,000 I put my offer in for exactly that but cash. My bid was accepted everything was good until my proof of funds letter was declined. So now the property is back on the market and I want to bid a little lower say 30,000 and my realtor says I wouldn’t do that. It is an exclusive bid and it closes every 24 hrs so I’m not biding against investors do you have any advice

  123. Hi mark,

    I have an inexperienced realtor who is learning on the fly. Anyways, I had my bid accepted on a hud house. I had the house inspected and I found a few issues. I wanted some money knocked off my offer. He told me I couldn’t do that without removing my offer completely. So, I said I would just deal with the issues. Then the city came in and found a lot more repairs that need to be done before I move in. I tried getting a conventional loan, but the water could not be turned on and I got denied. My agent talked to hud and they agreed that they would now accept a fha 203k loan. When I bid on the house I was expecting somewhere around 3.25% interest. Now, I’m around 4.5% and I’m thinking I should be able to lower my offer because The fha 203k is so much more expensive. My agent is telling me if I want to lower my offer. I have to walk away from the deal. Then I can make a new offer, but they will go to the other bidders first. Shouldn’t I be able to amend our deal instead of removing it altogether?

    • Hi Robert,
      Your agent is right about all of that. HUD does not lower the price in any case for any reason unless the house is physically damaged after it goes under contract. To get a lower price you will have to cancel your contract and rebid hoping no other offers are accepted.

  124. Hello Mark, Thank you for still responding to a post that you made over a year ago. I noticed when making offers on HUD properties here in Florida they typically accept between 80-85% of asking price when its a new listing. I have had a couple of occasions where the property has been on the market for awhile (not sure how long)they have accepted as low as 65% of list price. Do you know what usually causes HUD to accept offers at lower percentages?

    • Hi Erby,
      Different regions of the country see different percentages that they accept. I think some of it is based on the economic outlook or housing market in that area. After 60 days they will usually look at low offers like the 65%.

  125. Hi Mark! I bid ( and won) a HUD home and it had included a LBP report with an estimate well above the HUD cap of $4000. Is the estimate included in the LBP report the one HUD considers or do they get several estimates from local contractors?

  126. Hi my wife and I are looking at buying a HUD home and have placed a bid on one I was wondering if you think our bid was a wise choice. house is listed for $102,000 and we submitted a bid of 95,000 with closing cost. Also wondering if our realtor would be able to see other bids placed on the house. Thank You. Brandon S

    • Hi brandon,
      Your agent cannot see the other bids, the listing agent cannot even see them. I have no idea what would be wise without knowing your market and the home. Your agent should know much more than I.

  127. We have had to have three extensions on our hud purchase due to the lender and now they are late on getting the closing docs to hud. Will hud give a 4th extension if the closing department has everything?

    • Hi Jennifer, sorry for the late response. I have been on vacation. It is up to the asset manager if they will extend again. Usually they only allow two extensions. If your deal falls apart I would suggest a new lender.

  128. Hi Mark! Great Article! I found it very helpful since I just won a bid on a HUD home in Texas and am very excited to buy my first home. However, I have a question that hopefully you can answer. While going through the the whole buying process, I found that the HUD home city was listed incorrectly. The HUD home address was listed as being in Keller, when it is actually in Fort Worth. Keller homes have a much higher median home value than Fort Worth houses and I bid on the house with that impression. Is there anything that HUD can do to compensate for their misleading mistake that caused me to overbid (I bid $10,500 over list price, since there where almost 100 bids) on the house?

    • Hi Etsy,
      HUD will not reduce the price or compensate for an issue like this. They are very clear it is up to the buyer to confirm all info before bidding. They will let you cancel if you want and may or may not take your earnest money and accept the next highest bid.

  129. Hi there, you seem very knowledgeable on this so I thought I would ask. My husband bought an owner-occupied HUD home in November 2013. We downsized at the time and after getting into the home, realized it is too small. My husband is the only one on the loan – and I didn’t have to sign any loan docs. A much larger property down the road just came available. This one is also a HUD home. We REALLY want to purchase this one and get more room. We never intended on leaving this property, but it just isn’t what we expected. My question is if I were to purchase the property without my husband (the opposite of the last purchase), would this be legal? We have 2 issues – 1) we haven’t been in this property for 1 year. 2) we purchased an owner occupied HUD home last year. If we bid on the home, by the time we closed and by the time the 60-day repair period prior to occupancy is up, it will be 1-year that we were in this home.

  130. its not so much the loan we have or dont have
    its the asset manager’s property manager contacting our lender directly with verbal discussions regarding the property that lender said was “new” information to her that was not included in the written disclosures or PCR which up to now we dont even know what it was except that he made it sound more serious and had more damages than what was already written up and provided to the lender
    the contracted asset manager was very aggressive and adamant about making our lender back out so that the appraisal could not be carried out
    it almost borderline sounds very illegal and that his prior comments to our realtor about “us holding up the property and keeping it off market too long” was apparently not to their benefit and the repetitive comment from beginning by the listing agent and the broker asset manager later stating they already have a cash buyer as a back up just was totally very upsetting

    • Hi Mina, the loan is extremely important to this situation. The asset manager works for the seller. Their job is to get the houses sold for the most money. There is no law that says they cannot talk to your lender to verify info or disclose what they know about the home. The lender should be able to tell you exactly what scared them and if they won’t, get a new lender.

      You really need to tell me what kind of loan you were using, otherwise this is all speculation. Seeing that you won’t tell me, I am guessing it was a loan that required water to be on, in which case it would not have gone through and the asset manager just saved you a $400 appraisal fee.

  131. Didn’t even get to answer of water on or not, asset manager stated it was the management company who decides that and we never got a clear answer it was all its and buts and our main concern was the call to our lender with verbal information not on paper that was disclosed that lead our lender to cancel contract instead of schedule for appraisal and felt it was done underhanded against our benefit and more towards the asset company wanting to move onto cash bid which they disclosed from beginning and most likely not an o/o that’s why we wind the first bid

    • Mina, if you bid during the owner occupant only period, only owner occupants can bid. If they accepted a backup bid, it could only be from an owner occupant. Investors can’t bid at all during the owner occupant period.

      I would still like to know what kind of loan you were getting. That would help a lot.

      If HUD finds any leaks in The system, you won’t e able to turn on the water. That is HUDs national policy. That is why a VA or USDA loan wouldn’t work. You can’t turn on water for those appraisals, but the loans won’t go through without water on.

  132. Yes IE for plumbing damage small amount for no pressure and more money for punched holes on wall about 3k for walls but is minor
    Lender aware of everything even pictures she forward to underwriter who cleared it to go through
    Until call from asset manager, our realtor said they had a back up cash bid and they did not want us to hold onto propmand waste time despite were on way for appraisal
    Could an asset manager do that?

    • That doesn’t make any sense to me unless you are going USDA or VA or another loan that requires water to be on. Then the chances of closing are about zero because HUD won’t fix those items and those loans will require water to be on. If you are going FHA then the escrow can be used to repair the items after closing and there should be no issue. In fact you wouldn’t even need an appraisal if you are going FHA.

  133. Hello, I have a situation thought you could help. to make long story short we were going to close on a house then last minute they had a lead check that quoted for a bit over $4000 and at the end of all this they asked that we change our financing. its been about 5-6 months of playing this game and we want out. we have put about $1000 in extension fees, $400 in appraisal fees and $550 in repair costs. not to mention $1000 in earnest money. its a long story. but we feel they are at fault. can we sue? we just want what we put in. this has been a waste of time.please tell me what you think.

    • Hi Linda, First off you can sue anyone, but suing the federal government is not going to be successful.
      Did you switch to FHA financing later in the the contract? HUD does a lead based paint inspection on all FHA contracts but they do it at the very beginning, not months after a home has been under contract.
      If the lead based paint comes back positive and less than $4,000, HUD will fix it, but if it comes back as more you can’t go FHA anymore, unless you do 203k rehab loan. Then they will give you a credit of $4,000. If they find lead based paint they will give you the option of cancelling at that point and getting your earnest money back. If you decide to proceed after they find lead based paint, they may not give back the earnest money.

      Why did you put $550 in repairs into the property?

      • Thank you, we have been doing FHA. the lead inspection was done about 4 days prior to inspection. we did ask for credit but they said no, we asked for a repair escrow that also said no. that’s when they then asked that we change the financing. we were upset. about the repairs we had to clean up some mold, put in smoke and carbon detectors, some spray painting, rail installed and the most expensive was the plumbing. since it was empty we had a harsh winter and had to fix some leaks or they would not sell. this house was on the market before and then off and then on. I don’t know why the previous people were not able to go through with it. Not to mention it also has radon, and we would had to convert a finished basement into unfinished. after the closing. this whole situation is a mess. I’m wondering if there are more people out there like us?. thank you again.

        • Did you already close on the house? HUD does not allow any repairs to be made before closing. Did your agent or lender tell you to make repairs? They should not have if they did. HUD will give a $4,000 credit for lead based paint if the bid is over $4,000 and you switch financing. Why has it taken 4-5 months? I think this may be more of a lender or agent issue than a HUD issue.

  134. hello
    can an asset manager contact our lender directly and give verbal information on the property outside of the PCR on hand? we did not tell them to contact lender and were ready to do appraisal but after the verbal information lender received “over the phone” lender changed course and told us to cancel as it will not go through due to “new” information she received
    shouldnt this be in writing and not over the phone

  135. We have been waiting for the FHA appraisal and been in contract from last week
    What are our rights as to the timeliness of receiving this

    • Hi Mina, are you getting an FHA loan? HUD stopped giving the appraisals out unless you are going FHA. It should have been attached to the signed docs from HUD if you are going FHA>

  136. Can an asset manager legally contact our lender while in contract and give lender verbal information about the condition of property beyond what is in the PCR? As a result of this call our lender has backed out when we were supposed to be doing an appraisal instead this week
    Shouldn’t the information he delivered be in writing since lender was ok to push through with PCR on hand and was awaiting FHA appraisal? Pls help

  137. hi what is HUDs policy now on water not holding pressure, will they allow to turn on utilities, if they put a $1000 repair on its disclosures does that indicate what…..can you get a copy of their full FHA appraisal while in contract.

    isnt a $1000 repair appears small

  138. Hi Mark.

    Nice article. I recently saw a home that was “sold” to the secretary of housing and urban development. The tax records indicate that HUD is the current owner of the home.

    About how long does it take from HUD taking over ownership of the home to list it on the open market? Is there a way I can tour the home during this period?

    • Thank you Tom, It can vary greatly. Some HUDs will be put on the market right away and others will take months or even over a year. In some cases HUD is selling these in huge pools to hedge funds. There is no way to view them before they go on mls (legally)

  139. Hey Mark,
    I have a client interested in a HUD property…the appraised value is $175,000, HUD just dropped recently to $105,000, and the home needs several thousand dollars in repair. They are getting a 203K approval, and my question is…How do you submit this on HUD Homestore site? I checked the 203K financing, but wondered if we submit what the home As Is value is plus what the rehabbing costs are total, or do we submit the As Is value only checking the box for 203K financing? Hope this makes sense
    Thank you.

    • Hi, You only check the 203k and submit your bid for the as-is purchase price. Since you don’t know the exact cost of the rehab yet, you do not enter that amount anywhere.

  140. Any idea how often GNND homes in the greater Phoenix area come on the market? I’m looking for one within a 35 min drive to Scottsdale.

    • Hi Will, They are very rare in most areas of the country. I only see a couple at a time in each state. To find one in a specific market you might have to wait months or longer.

  141. I have an accepted bid on a HUD home as an o/o paying cash. I’ve been trying to understand if Hud won’t let you alter a home before closing but the county the house is in won’t transfer the property until the water contaminates and septic tank is replaced how can this ever be closed on? This makes no sense at all…

    • Shawn, HUD’s policy is to do no repairs or let any repairs be done before closing. If the county won’t let the property sell than they may make an exception. It can’t just be they won’t let anyone move in, but they won’t let is sell. In my area the county can’t stop someone from selling a home in most cases.

      • I beleive if you have a licenced contractor write an estimate for repairs and you sign a contract that you will get the work done ( with the county) they will allow transfer of property. But my issue is i`m more than capable of fixing the issues why should i have to pay a contractor.

        • If that is what the county requires, that may have to be what you need to do. It sounds like it is more of a problem with the county than HUD. HUD’s national policy is they will not allow repairs to be made prior to closing. They may make some repairs themselves in extreme circumstances, but it is very rare.

  142. How would you know then how much the closing costs would really be, if you were trying to bid as low as you can? I mean is all that $2000 going to be specified as going to pay closing costs alone? Or is that up in the air?
    Also what is your experience with HUD and VA loans especially when its a fixer upper?
    Do the loans go through even if HUD wont do any fixing? Have you encountered that problem with VA loans and a seeming bias or contradiction on requirements of both these 2 government entities. Do you think veterans, especially war time vets, should have some kind of first rights to offer similar to Good neighbor? Coz Ive heard around that VA loans are put on the bottom pack due to this and it appears a gross disservice to service members. I would love your opinion and also on the reality of things as a HUD broker yourself

    • Jane, your lender should be able to give you a decent idea. They will vary on each loan and with each lender.
      If you use VA, you have to make sure the home will not need any repairs according to VA guidelines. HUD does not fix anything for any type of loan.
      HUD only looks at the net price, they do not look at the financing type or even if it is cash. They make these rules to take out all bias towards buyers and only look at price.

  143. Hi Mark
    is the net to HUD different from the minimum acceptable bid
    for example if HUD states a counter offer with a net to HUD equal to or greater than $100,000 does that mean you resend a bid that is plus and plus the commissions and or if you adding closing costs and that number is not exactly the minimum bid that they will accept, can you please clarify
    and is each different from the other
    thanks so much

    • The net to HUD is minus the commissions and closing costs. If the net to HUD is $100,000, then the bid might be $108,000 with 3,000 to listing broker, 3,000 to buyers agent and 2,000 in closing costs.

  144. Hi when will you know if your bid is accepted or not? If you submit a bid earlier than the bid deadline and ask for a one day response? and hear nothing does that mean your bid is not accepted or do you have to wait till the end of the exclusive period before they actually decide

    • Hi jane, HUD does not even have a place for buyers to ask for a response time. HUD will respond the next business day after the bid submission deadline is up. They usually do not notify you if your bid is not accepted, but the agent can log into HUDHOMESTORE and see the bid status.

  145. Great article!

    we are in our first home hunt ever! – very difficult to get a place in our price range since it’s with the investors BUT we saw a HUD home come up.

    After it being on the market for 2 days we put a full price offer on it this past Friday and got the confirmation email. Is it true that if the confirmation reads 001 at the end we’re the first offer?

    Also, if i understand you right, we wont hear back from them until after the 10th day? or since we are within 5 days do we hear next business day (monday?)

    We are so anxious – we have lost 3 homes now due to bidding!

    We are worried that even with our full price offer on the 3rd day of being on the market that we still wont get it 🙁 – the place is move-in ready with appliances … and the price is RIGHT at market value.

    What else can we do but be the first bid (potentially) at full price?

    Also if someone else does have a higher bid is there a window of time for us to counter or does HUD pick the highest and go?


    • Cam, thank you. Yes 001 should mean yours was the first offer. It depends on the bid period when you will hear back. If it is insured then it will be 10 days. You can see on hudhomestore how long is left in the bid period. Bid submission deadline.
      HUD will pick the highest bid at the end of the bid submission deadline. They only counter if a bid is not high enough, but full price will be. You can always offer higher than full price, but be aware if you are using FHA you will have to bring more cash to closing.

      • this home (and US) qualify for FHA $100 down payment (anything wrong with that?) we are assuming 3-5k in closing costs for this home?

        is there any harm in us putting a bid in below our first bid just to see what number it says? Is that against any rules?

        Also, regardless of that question, we feel going in at asking price is a great offer but how often do people put in an offer above asking price? our realtor said it is an aggressive offer on our part but the home is still under market value and we should offer our highest and best (affordability wise)

        We just dont want to be bidding against ourselves and/or not get the home because we didnt offer $1 over the asking price…

        hope this all makes sense!


        • Hi Cam,
          The $100 down payment may have some more costs, I would ask your lender to compare the $100 down with a normal FHA loan to make sure you are getting the best deal.
          HUD will only respond tot he highest bid. If you place two bids they will only look at the highest bid.
          It varies by the market how much a HUD will sell for. I would estimate 50% of my HUDs or more are going above asking price.
          I would always bid a little more than asking, $68 could do the trick.

          • Thank you so much for the feedback. I will talk with our lender to compare the $100 down vs other FHA options.

            We will put an other bid in tomorrow to see what our confirmation number says (002 we hope! not 055)

            Here is more to the situation:

            Townhome Listed: $95,000
            Our Offer: $95,000
            Estimated market value: $105,000

            It seems HUD has priced it to sell quickly AND it is a move-in ready unit with all appliances.

            Hard decision to know how much more over asking price we should have our highest and best at!? We want it to still be a deal and have an attractive affordability to it (for us)

            I will post back and let you know what the HUD confirmation number says and then offer our highest and best on Friday.

            Bid Submission Deadline: 5/26/2014 11:59:59 PM CT

            The deadline is on memorial day – we should still know who wins on the 27th right??


          • We had the highest bid! we then sent in the paperwork within 48 hours and now waiting for them to formalize the offer/acceptance. YES! ..and then off to get financing… on the path to getting into it in the next 30 days! woot woot!

  146. Hello Mark, I have in an offer to HUD, but their Net is about 6,000 less than 12% of the asking price. In your time with working with HUD homes, do you think its a pretty good chance they will reject it ?

  147. I am suppose to be closing on a HUD home in less than two weeks. I have already had to get two extensions, and am now being told we probably won’t be closed before this extension runs out. Can I still back out of this contract with HUD at this point, and if so what would the legal aspects be as far a realtors, loan originators, etc. They have told me I could be sued if I don’t follow through.

    • Hi Cynthia,
      You have to pay for each extension correct? HUD may not even give you a third extension and if your lender is the hold up they should give you a letter saying they can’t close on time and you should get your earnest money back from HUD. It is not your fault your lender is not closing on time and they have no recourse against you as far as I can see. I would always suggest talking to a lawyer as well as I am not providing legal advice.

  148. Thank you for clarifying. I wish I double checked on a few confusing parts. This was my first time doing this. Anyway, I tried calling and going to the website. Do you have a specific number to call them?

    • If you are trying to get a hold of HUD the best way is to talk to your real estate agent and have them contact the listing agent. HUD has a 1-800 number on their website as well. I don’t have a direct number for them.

  149. Question! I am new at this and I did bid on a few homes, as each time I didn’t get the bid. Then, weeks later I got a call that they accepted my bid after all. ( I guess the person who got it first, something fell through) My question is.. when is this time frame on a bid like mine that didn’t get it the first time, but weeks later? I wasn’t sure of the owner occupy time frame on that. Thank you ahead of time!

    • Hi, If you submit a bid that is not accepted at first, but accepted later on, the time frames are same as when you first submitted the bid. HUD does not count any days that a home is under contract. If the owner occ period is 15 days and the home goes under contract on the 11th day and that contract falls apart. The home comes back on the market as being on the 11th day to HUD. Your bid you submit will be very specific if it is owner occ or investor. If you first bid as an owner occ and now want to be an investor, you will have to cancel your bid and rebid.

  150. read through all the posts and couldn’t find my answer.. 🙂 we are closing in about two weeks on our HUD home..two questions..can we turn the utilities on a couple days before close?..and..can we get the carpets cleaned a couple of days prior to close?..i know we have to change the locks on day of close..want to move in on close day, but not on dirty carpets and no utilities on.. oh, one more thing..have a portable storage container..can we place it in the driveway prior to close?..

    • Hi Steve, unfortunately you cannot do anything to the home before you close. You cannot move anything in, clean anything or remove anything. You can only turn on the utilities by using the utility turn on request form. I would not risk doing anything because the Realtors and FSM checks the home right before closing.

      • thanks, Mark..guess i’ll need to chill and move in a day or two after close.. 🙂 cool thing, the process hasn’t been too bad at all..have a good title company and a great loan officer..looks like the whole process from beginning to end will be 30 days or so..

  151. Ok, they just removed the home today for a price drop. How long does it usually take them to put it back on the market for bidding?

  152. The asking price on the home is $165,000 and they countered at $150,000. How long does it typically take to lower the price? It hasn’t been lowered yet since it has been on the market. After they do lower the price, will they only accept 10% below asking price like they are doing now? thanks for you help.

    • Beth, it usually takes 35 to 45 days of the home being active on the market. That means it has to be available to purchase for 45 days; when you have it under contract those days don’t count. Yes, they usually lower it about 10 to 11% and then will accept and offer with a similar discount. Once a home reaches 60 days on the market they may start accepting larger discounted offers.

  153. We are currently bidding on a HUD property that has been on the market for a little over 30 days. We did a walk through on the home with the realtor along with a construction contractor and were told that the home needs an additional $20,000 in maintenance and we can not turn on the water for an inspection due to plumbing issues. We have bid 2 different times but they will not budge from their asking price. Should we wait until the price drops (I think it usually drops after 45 days?) or keep bidding a little higher prices each time we bid on the home? We do not want to give the asking price because by the time we pay for the home and the additional expenses we would owe more on the home than what is appraised for. What should we do?

    • Hi Beth, The first thing I would say is the appraised value is not market value after the home is fixed up. THe appraiser values the home in as-is condition and is not always market value. I would have your agent do a market evaluation on what the home would be worth after it is fixed up. HUD appraisers come in low all the time. Did HUD counter you? When they counter that is basically their bottom dollar and you have to wait until they drop the price in most cases.

  154. If there are multiple bids over the listing price during the owner occupant period, will the highest offer be accepted, or will the HUD counter all bidders with a best and highest, and then accept the highest offer? Does that change if the multiple bids are under the listing price but within the 4%-6% less range? Thanks.

  155. We’re downsizing, We’re in the process of selling our house and looking for a smaller house. Can we bid on a HUD home to live in one our current house is sold?

  156. next week I’m closing the hud house
    But I have a problem my ID is expired and
    I am not an American citizen
    Can I use my country passport as ID

  157. Mark, We are currently dealing with HUD and completing their paperwork process on a house that our bid was accepted on. Every time we complete paperwork though, they send it back with something wrong with it. They want it filled out this way, then that way, then this way again and we keep complying. We have redone paperwork with our real estate agent numerous times and we feel like we are getting the run around or that HUD no longer wants to sell us the house. Our winning bid was more than the asking price, but there always seems to be something “wrong” with paperwork we submit. Our real estate agent used their online form and it populated all the lines and they came back and said one of the social security numbers didn’t match, but it did. We re-did it again anyway per their request. What can we do, we rely feel like we are being jerked around by HUD and we totally trust our agent, she is like family. We are all very frustrated at this point.

    • Hi David, like I said in my email HUD does not care who buys the home. They care about the price they are getting and that all their guidelines are met. It is a process to get a ll the paperwork done correctly and hopefully you get it figured out!

  158. Hi! Our bid has been accepted on 3/24/14 and we turned in the contract on 3/25/14 we had to make several corrections and on 3/27/14 my husband had to sign the binding contract, and our agent send it in electronically this morning, still have not heard anything on if the asset management has signed the contract, how long does it usually take for asset management to sign the contract, the only thing we’re waiting for is the signed contract so our lender can send off our loans and everything….

  159. Hi.
    after closing a hud house .
    if the house needs repairs like the floor or roofing
    I can move or repair must first
    Hud have some rules to this ????

  160. I bought a HUD home property as owner occupant, but there was a balance due at the city for paving special assessment for $2089.00, and that amount was under the seller fees in my closing document, day before the closing the hud agent e-mailed my closing agent asking her to move that amount to the buyer because hud never pay for city assessment, I called the hud office in my area to make sure what’s going on and why, but no help, the answer was (no) they will not pay that amount ,and if I don’t like it I will lose my $500 EMD, I contact a few attorneys over the phone about this situation, and all agreed that the seller should pay that amount not the buyer,plus all the document that I signed before the closing none of them showed that I should pay that amount plus it doesn’t show any fees except the sale price and the realtors commission,can you please advise me wrong or right/Thanks

    • Hi Sam, this is a tough situation and I have run into it before where a town wanted to charge $5,000 for the water to be turned back on. HUD would not pay it and it was up to the buyers. HUD was very clear to me that they don’t pay special assessments like this and it was up to the buyers. It may be typical in your area for the sellers to pay for costs like that, but HUD has their own rules. It is their home and they can decide what they will and will not pay.

      The problem is you are so close to closing. The special assessment probably showed up on the title commitment from the title company and they assumed HUD would pay it without double checking.

    • HUD does not dewinterize, they only rewinterzie after inspections if the water is to be turned on. To dewinterize the buyer has to perform all actions including getting the utilities on.

  161. Is HUD required to maintain the property during the 45 day period between a purchase agreement being made and the buyer’s closing? In our case, the sump pump was not connected which resulted in flooding of the finished basement, so now there are additional damages to be repaired that were not there when we signed the purchase agreement. HUD had the water extracted but will not repair any of the damages, nor will they give us compensation at close by lowering our purchase price. Can we sue HUD in small claims court for the recovery of these damages?

    • hi Rachel, I am sorry to hear that happened! You can sue anyone you like, but that doesn’t mean you will win. In this case I would estimate your chances of successfully suing HUD at less than 1 %. The problem is HUD owned the house when the damage occurred. You had a contract with HUD to buy the house, but if something happens to the home that does not mean HUD is obligated to fix it. It would also be hard proving the only reason it flooded was because the sump pump was not hooked up. Do you know the sump pump worked? Do you know the house would not have flooded if the sump pump was on? These are questions that cannot be proven.

      Finally HUD is pretty clear in the contract you sign that they have the right to cancel the contract at any time and give you your earnest money back. This is an unfortunate situation, but your only options are to buy the home as is or cancel and get earnest money back.

    • I am not sure I understand. You can close with cash in two weeks and possibly less with HUD. If you buy as an owner occupant you can sell the home after one year. If you buy as an investor you can sell at anytime.

  162. I recently saw a yard sign for a HUD home . It was under contract as of 02-19-14. It still had the bid results page on until yesterday.Now it is gone does this mean this house is officially off the market?

  163. Hi, I made an extremely strong cash offer on a HUD home property as owner occupent. At least I think it is A strong offer. What’s considered to be a strong offer? 10,000 over asking? Or more?

    • Hi Millie, that is a tough question to answer. It all depends on your market and the particular house. What is the house worth and what are others in your market willing to pay? It sounds like a strong offer, but if the price is 30K too low, then it may not be.

  164. Hello, Mark,

    My husband and I won the bid on a HUD home. Condition was pretty good and we didn’t anticipate any problems with our VA loan requiring repairs. Unfortunately, we were incorrect and had to cancel. We can qualify for conventional financing with a small drop in the bid amount. Are we allowed to bid on the house again using different financing once we’ve cancelled a contract on the same property?

  165. I was wondering about how long does it take HUD to list a property for bid? The property has had signs on the front door that say “winterized” for 4 months now. I was just curious?

    • Hi Valerie,
      It can vary greatly. Some are listed right away and others can take months to list. HUD has to get clear title from the bank that foreclosed on the home and clean up the home plus abide by all local and state laws for foreclosure and evitctions.

  166. what are the questions asked by lenders when someone would like to buy a HUD home ? are they looking for additional documentation/proofs on clear title etc ?

    • Hi Satish, HUD provides clear title, although the buyer should still purchase title insurance. There should be no other documentation required over purchasing a regular home. It is good to work with a lender familiar with HUD and their policies.

  167. Hi Mark,
    Thank you for your articles & answers. I have been watching a property since last November. I did find out that it is being conveyed over to hud from Wells Fargo. I check the HUD Homestore daily but it still isn’t listed and I’m getting antsy. Are you familiar with how long it takes for a home to be listed on the HUD site?

    • Hi Katie, It can vary greatly from when the home is conveyed to HUD to when it is listed. HUD has to get clear title, clean up the home, possibly evict someone and in some cases HUD is even selling some of their assets in bulk sales. There is no guarantee that home will eventually become a HUD home. It can be week or months until it is listed.

  168. We are 20 days into a contract on a HUD home. A neighbor in the area told us that the swimming pool has a leak. The pool was not mentioned in the condition report. It covered in such a way that you cannot see much into the pool other than to see that the water level is definitely down several feet. We are concerned about the cost of repairing the pool – an estimate of up to $10,000. if the pool has to be removed. Is there a form we have to fill out if we decide to cut our losses & walk away from the contract? We would be out the earnest money, appraisal & inspection.

  169. I have an accepted offer with a hud home, when I made the offer it was open to owner occupied and invester ( it had been on the market for several months with a ouple of price reductions). The property is a cabin in a rural area and I want to use it as a vacation home and on the offer I put owner occupied and now I am thinking I should have put it as invester. What’s the chance that hud will change this? If they don’t change it would i be okay to purchase the cabin and put all the utility’s in my name but only use it as a vacation home? I don’t want to loose my deposit or the property.

    • Hi Shane, HUDs definition of owner occ is that the person has to live there more than 50% of the time. Putting utilities in your name won’t satisfy those requirements. You can try asking HUD to change to investor, but you may have to cancel your bid and then rebid as an investor. You will get your earnest money back for financing reasons like if your lender says you are an investor an wont qualify for a owner occ loan.

  170. I bought a HUD home back in August. I moved in, but then my aunt got breast cancer and I wanted to move close to her because she needs help getting to the hospital and general care. Would this count as an extenuating circumstance? I don’t want to do anything illegal, but I need to be close to my aunt for her care.

  171. We made an offer on a reverse mortgage foreclosure. Offer was accepted, however when it was time to do the inspection we were presented with a form stating that we would have to assume full liability of any and all damages that result from turning on the utilities. We are more than willing to pay for the activation, de-winterization and winterization of the property, however are very skeptical of this form. Does the bank know something that they are not disclosing? This hardly seems right or ethical. How can we perform an adequate inspection without power or water? How can we assume full liability on something that does legally even belong to us yet? If the house floods or burns down in activating the utilities will they come after us the potential buyers? We have not signed the form, however are very interested in the house as owner-occupants.

    • Hi Evette, this is very common for banks to use a form like this. Usually it is worded that any damage resulting from buyers inspection, not necessarily turning on the utilities. There is some risk involved in turning on the utilities, but if you have a professional there to turn on the utilities for you, they can usually tell if there is a problem. The reason they do this is because of buyers who turn on utilities, never check for leaks in the plumbing system and the house floods because they left the water on after the inspection.

      Usually the best practice is to turn on the utilities for inspection, then shut off the water at the main and depending on temperatures turn off the other utilities as well. If it is going to be cold, leave on the heat and electric until the house can be winterized again. You can always do a pressure test as well on the plumbing system.

  172. I purchased a HUD/FHA apartment and been living in it for the last four months. I intended to occupy it and signed an occupancy for a one year clause. But we have grown unhappy about the commute that takes us on 20 miles over an hour each way for me and my girlfriend. We previously rented right next to work. We have found a pretty cheap rental from a friend next to work. We are tempted to take it, but we are very much concerned about the property and we do not want to do anything illegal. We are thinking on taking a hit and leave it unoccupied until we satisfy the one-year in which case to rent it out. Would this violate the FHA/HUD occupancy law?

  173. Hi Mark, I purchased a HUD/FHA and have occupied it for 5 months already, but commuting to work 20 miles is taking over an hour and more painful that I ever thought. I found a cheap rental next to work, I want to move and “hold” the property unoccupied until the year then rent it. Would I have an issue with this?

    • I think as long as you aren’t living somewhere else with an owner occupant loan you would be okay if the home sits empty. HUD does allow people to avoid the owner occ restrictions under special circumstances like a change in employment, but I am not sure this would qualify.

  174. A follow up. Can we rent our main house and move to the HUD house and still satisfy the occupany requirement or do we need to sell our home.

  175. I am curious if the Repair escrow should show up on the HUD as an addition to your loan and also a debit for the repairs, so basically a wash. Is this right?

    • Hi Justin, It is an addition to the loan, but HUD does not pay it. I am not sure exactly how they list it on the HUD, but it is added to the buyers loan and the buyers are not reimbursed in any way from HUD.

  176. I will. The closing date is set for January 2nd. But with Christmas and new years coming up, I will ask my agent to submit the request tommorrow. I dont think the deal will happen by the 2nd.

  177. Will HUD grant me an extension on my closing date if the lender hasn’t officially approved my loan because they continue to ask for additional documentation?
    And if I request an extension, how long does it usually take for HUD to grant it?

    • Yes, you are allowed two extensions. HUD will charge you for them though. Up to $375 for a 15 day extension. If you don’t use all of the days in the extension they will give you a prorated amount back. They will usually grant it in a day or two. Make sure it is submitted well before the closing deadline

  178. Monday HUD accepted my offer. Today the asset manager received my contract via mail. How long will it take for them to sign and return an executed contract to me. The bank states that I cannot do anything on the loan side of things until I give them an executed contract.

  179. Thanks again…is there somewhere within the HUD site I can find information about not requiring the Utility activation form? The RE agent says that although utilities are on, I won;t be allowed to conduct an inspection without the Utility Activation form being completed.

    • It might be under the FAQ section. HUD actually encourages buyers to do inspections before homes are are under contract without utilities on. The form is the utility turn on request form, so logically you don’t need it if the utilities are already on. If you agent wants you to sign the form it won’t hurt anything, unless he is saying you should send in the $150 for re-winterization too.

  180. Thanks for the response. One more question..if the condo I am bidding on already has utilities on (incl electric) and heat and hot water are actually included in the condo fee. Will I need to complete a Utility Activation? The condo has not been winterized.

  181. Thank you. I will suggest that to the title company.
    Also…i dont want to be negative, but if this doesn’t go through again … How many extension can we actually get?… (Hope for the best ..prepare foe the worst)

  182. Help… Its the first time my title company tries to close on a hud. I had to extend due to incomplete package… Missing itemized escrow credit… Where van we get a list of items to submit and in what way can the credit show what was covered if the closing cost exceed the credit. Is there a sample complete package out there to follow?

    • Hi Karina,
      With the new system HUD does not have a sample package for the title companies. They have told us the title companies basically have to wait until they are chosen and then HUD will help them. We have been helping the title companies as well so you can try asking the listing agent for advice.

  183. I am to bid on a home with a $300 repair escrov. Will that amount get added to my closing costs? If repairs are completed and paid for after closing, how can I qUALIFY for an FHA loan? Also, if repairs are completed within 60 days after closing and cost less than $300 who gets the balance of the escrowed funds?

    • Hi Adriana
      That amount will be added to your loan amount, not closing costs. That is part of the FHA program with HUD, they have already done the FHA appraisal and it must have those repairs done to go FHA. Because of HUDs FHA 203b program they can be done after closing. If you don’t use all the money it goes towards the principal on your loan.

  184. What happens if the buyer is not an investor, but after completing repairs by the end of the 60 day post-closing period, fails to get a certificate of occupancy from the township? Is this considered violating the contract if sincere efforts were made?

  185. Is there any place that it states that if you are a current property owner you are not allowed to bid on a HUD home under the owner occupant provision as long as it is our intention to live in the home?

  186. I have a question about offers to HUD. I offered 82% net-to-HUD on my first bid, which HUD rejected. The email response from HUD stated that their minimum net for the property is an amount equal to 90% net-to-HUD. My question is: if I submit another offer, for 88% net-to-HUD, is there a chance HUD would accept that? Or do they stick to their stated minimum net until the listing price is dropped after enough time on the market? I’m an owner occupant and the exclusive bidding period ends in 2 weeks. Is there any advantage to waiting a week before submitting another bid? There hasn’t been much traffic at this property, as far as I can tell.

  187. The problem is HUD lists tens of thousands of homes across the country. Each state and city has different codes and regulations. HUD hires local inspectors to complete the PCR and they rely on those inspectors to report any issues. If something is known not to be working they can change the PCR to reflect it. For future problems they have no form that says this item may break or this is a code violation. Many, many homes have code violations due to changing laws. Many homes have grandfathered in code violations that are actually legal and many have code violations that are not grandfathered in. HUD is very clear that it is up to the buyer to inspect the homes to get all the information on items like this. you can tell HUD, but again it is completely up the asset manager working for HUD if they change the PCR.

    They do more than most sellers by having homes pre inspected before they are listed. HUD encourages buyers to get inspections because they cannot completely inspect each properties systems mostly because utilities are not on many times they inspect.

    if it is an FHA loan and the problem concerns FHA lender than the items can be added to the repair escrow with two bids and a letter from the lender. Then those items may be added to the escrow repair list.

  188. HUD is federal so they don’t have to abide by state laws. I don’t know exactly how they handle disclosure issues, but if it is a code violation they may not change it. They usually only change it for things that are known not to work if listed as working etc.

    • Ok. This is starting to get clearer. So if something is installed improperly, and will likely cause safety issues in the future, HUD is not concerned about that. HUD lives for the moment.

      And if an item is currently working and currently not on fire, HUD will not change PCR and isn’t concerned.

      As buyers, then, our responsibility is to adjust offer price for this risk. Do I have an a+ understanding now?

  189. We are considering purchasing a HUD home that we know has unpermitted work done. The only one we are concerned about is a water heater incorrectly placed and installed in the attic. We figure the home inspector will report on this for us. This is a safety hazard for the house. Is HUD required to then disclose this to future buyers?

    Our agent said he thought it was against the law to notify hud of unpermitted work and dangerous installations. Is this true? We know it is sold in as is, but shouldn’t HUD modify its PCR if it is given new info? Thanks for a GREAT article that explained so many points of debate on theinternet. It is a relief to find a source we can trust.

    • Hi Fred, it is not against the law to notify HUD of anything.
      They might change the Pcr if proper documentation and proof is given that shows it is dangerous. They usually aren’t very concerned with code violation as far as unpermitted work.

  190. We have bid on four hud homes over the last few months but don’t win. We bid over the asking price even by 10k on one! What gives? Is there something more we should do? We are getting discouraged.

    • Hi Shannon, This is what has happened with HUD homes now that the market is improving in many places. In my area HUDs are priced very well most of the time. I am seeing offers over 10,000 above list price as well. Those homes are still selling below most of the competition. I would keep trying and if it is a really good deal, don’t be afraid to make a really strong offer. Just remember if you are using FHA, you have to base the appraisal off of list price since that is the FHA appraised value. Any over bid amount has to be cash and can’t be financed.

  191. Hi,

    My partner and I bought a HUD home cash, with an occupancy agreement clause as we bidded in the first 30 days. We closed on the property about 2 weeks ago.

    We are fully aware of this and accepted this.

    Sadly our relationship has turned bad and we have split up. We even cancelled our wedding which was due in 3 weeks!

    Neither of us wants to live in the property. We are joint tenants with a 60% 40% stake.

    Are there any get out clauses to our HUD occupancy agreement allowing us to recover our money and sell without having to fulfill the 12 months?

    Does anyone have advice on how best to proceed?

  192. Can I buy a hud home with a co signer As an owner occupied. They are not using it as an investment just that we don’t qualify for a loan without them.

      • We purchased an REO Hud property for our daughter a few months back with the intention of her returning to college and supporting her daughter. We also are listed on the title to the home to protect ourselves. Our daughter has decided to return to her boyfriend in another state and left us with the house. She had occupied the house for about 3 months. We are considering selling our home to pay the equity loan and moving into the house. Will this satisfy the HUD owner occupancy requirement?

          • What are the guidelines to a HUD home once build … Can they have my friends living with them helping with the bills example rent out rooms to them. What is the occupancy limit in the home? Example a 3 bedroom home with 11 people living in it? 1 being the owner and 4 being the children…. all others just live there paying household bills. I asking because I want build HUD home in that neighborhood and there is one home that not been built over 2 years and has a hoard of people living in it and the home is eye sore for the neighborhood already junked up. Not sure if it owner can be forced to clean it up and cars of folks that live there block drive ways and keep the neighborhood pride. Is this legal in HUD home purchase contract? Can something be done to clean up the HUD home subdivision?

          • You can’t build hud homes. They aRe existing homes that went through foreclosure. The occupancy limits would not be based on HUD but your local city or county.

  193. How does HUD handle someone purchasing a property as a 2nd home (for example, a vacation home). No intention of flipping it or anything like that or renting it.

  194. My name is Stephen, I’m 20 years old, and I paid cash for a HUD house as an owner occupant. I purchased the house a year ago, and have lived in it for 10 months. I’m currently in Redding, CA, but I want to move to Nashville, TN in 2 weeks to start the planning for opening a coffee shop with my brother. Can I legally move to Nashville and keep my house? Can I live in it for another 2 months at a different time? I know that I can’t legally sell it, and I don’t plan to.

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