Buying a HUD Home: The Ultimate Investor’s Guide to Getting a Great Deal on a HUD Home

by |

I am a local listing broker for HUD and I figured I would write about what I know best for my first BiggerPockets BlogPost – buying a HUD home!  I see many posts on the BiggerPockets forum about buying HUD homes – and I see a lot of great information from the BP community and and some not so great information as well.  I hope to provide the BP community with some great tips on submitting bids on HUD homes and what to watch out for if you get a bid accepted.   I know many of you know a lot about HUD, but hopefully you can learn something new that will help your business when buying a HUD home.  This article will focus on an investor looking for a HUD home, if you are buying as an owner occupant most of the rules for HUD are very different.

How to Purchase Real Estate With No (or Low) Money!

One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.

Click Here to Download

HUD Asset Management Companies

HUD uses different asset management companies in each state and across the country to sell their homes.  Home Telos, Matt Martin, Pemco, BLB, Ofori, Best Assets are some of the asset management companies that sell HUD homes.  Each asset management company has slightly different policies regarding HUD home sales, but the budding policies are basically the same for each company.

Choosing a Realtor

To submit an offer on a HUD home, a buyer must use a Real Estate agent who is registered with HUD.  If you are working with a Real Estate agent, ask them if they are registered on  If your agent is not registered with Hudhomestore it means they have not submitted a bid on a HUD home in the last three years.  The next question to ask if your agent is not registered with, is if their broker has an NAID number.  If their broker does not have an NAID number, it can take six weeks for them to obtain one from HUD.  If you are choosing a new agent, these are some great questions to ask to see how savvy the agent is with HUD.

If you find an agent who is registered with HUD I would also ask how many HUD deals they have done in the last year. Buying a HUD home is very different than most transactions and I see many experienced agents have problems with their first HUD deal.  I am not saying you should ditch an agent you have been working with for years if they are not a HUD expert, but if you are searching for a new agent it is a great way to see how experienced they are.

Extra Costs Associated with Buying a HUD Home

There are more fees and costs than a normal sale with HUD, especially for an investor.

1.  HUD considers investors to be savvy and experienced when buying a home.  That means they will keep an investors earnest if the investor backs out.  HUD allows an inspection to be done, but if an investor backs out due to inspection issues, HUD will keep the earnest money.  There are some circumstances where HUD will refund an investors earnest money.  If An investor has their loan denied they can get half of their earnest money back.  If the home is damaged or vandalized after a contract is accepted, HUD will allow the buyer to back out and return the buyer’s earnest money.  For the most part, as an investor do not depend on getting your earnest money back of you back out of a contract.

2.  HUD does not pay for title insurance.  Sellers typically pay for title insurance in many states, but HUD does not.  You may use HUDs title company or your own, but you will have to pay for title insurance and closing fees.

3.  HUD does not turn on utilities for inspections.  It is the buyer and their agents responsibility to request permission to turn on the utilities and then turn them on.  Any costs associated with turning on the utilities including deposit, transfer fees and usage must be paid by the buyer.  During the winter months, HUD will also charge $150 to winterize the home after a buyers inspection if the buyer turns on the water.  HUD will pay for past owed balances and liens against a HUD property.

4.  If an extension is needed for closing,  the buyer must pay HUD for an extension.  The cost for the extension is as follows: purchase price is equal to or less than $25,000 you have to pay a $150 extension fee ($10 per day) for 15 days. $25,000.01 to $50,000 is a $225 fee ($15 per day) for 15 days. $50,000.01 and over is a $375 fee ($25 per day) for 15 days.  The extension fee is pro-rated so if the full 15 days are my used, HUD will refund money for the unused days.

When Can Investors Bid on HUD Houses?

HUD changed their entire system three years ago and changed the bid periods for owner occupied and investor buyers.  A very important thing for investors to realize is there are different bid periods for FHA insured HUD homes versus FHA uninsured HUD homes.  FHA insured homes allow owner occupants to get an FHA loan on a HUD property.  Basically if the HUD appraiser thinks a home has less than $5,000 in repairs to go FHA it will be listed as FHA insured.  If the HUD appraiser thinks a home needs more than $5,000 in repairs to go FHA, then the home will be listed as FHA uninsurable.

FHA insurable homes have a 30 day owner occupied bid period.  Investors cannot bid on a HUD home until the 31st day the has been actively on the market.  There is no way around this rule as an investor, unless you are willing to risk committing a felony punishable by up to five years in prison and a $250,000 fine.  One thing to remember is HUD stops the bid period once a bid is accepted.  If a home has a bid accepted on the 11th day, and that contract falls apart, then the property comes back on the market as if it has been for sale for 11 days. If you see a HUD home that has been listed in MLS for 45 days, it may not be eligible for investors yet, if it was under contract for 30 days and then came back on the market.

FHA uninsurable homes have a completely different bid period.  With FHA uninsured homes there is a 7 day lottery period for government and non-profit agencies to bid.  Depending on the asset management company HUD homes may or may not be listed in MLS during the lottery period.   After the 7 day lottery period there is a 5 day owner occupant bid period.  FHA uninsured homes provide a great opportunity for investors, since they can bid on the 6th day after the owner occupant bid period starts.

How to Tell What Bid Period a HUD Home is In

The number one question I get from buyers and agents is “can investors bid on this HUD home?”

HUD HomeStoreIt is actually very easy for any investor or Real Estate agent to see who can bid, if they know where to look. lists every HUD home that is actively for sale.  Once HUD accepts a bid they take the home off of  It is very easy to search for HUD homes on their website, just type in an address, street number, county or case number and the property will pull up.  Once you get on the property page HUD will list a lot of information and dates.  There are two very important items to look at to determine who can bid on a HUD home.

  • Eligible bidders tells you who can bid on the home. If the home is in the owner occupant period it will say “owner occupants, non-profits and government agencies only”.  If the home is in the investor bid period, it will say “all bidders”.
  • Period deadline tells you how much time is left in the current bid period.  This date is the last day of the owner occupant bid period if the home is currently only available t0 owner occupant bidders.  The day after this date, is the first day investors can bid on the home.

When Buying a HUD Home -Bid as Soon as Possible as an Investor!

In most areas of the country prices are rising and it is tougher for investors to find a great deal.  HUD usually has very good pricing on their homes and can provide a great source for investors.  Because of the great pricing we see on many HUD homes, there is a lot of competition when a HUD home makes it to the investor period.  There are a couple tricks investors can use to gain an advantage over other investors.

The first trick investors can use, involves bidding on FHA uninsured HUD homes.  HUD’s asset management companies will review all bids they receive on an FHA uninsured home on the next business day after the owner occupant bid period expires.  The HUD asset management companies review the bids from very early in the morning to early afternoon.  HUD allows buyers to submit a bid if the property is still listed on the website and properties are listed on the website until a bid is accepted.  There is a short period of time that investors can submit a bid on these homes early in the morning after the owner occupant bid period expires, but before a bid may be accepted by HUD.  I see the asset management companies accepting bids as early 6 am  in my area.  HUD closes the bidding at 12 pm central time, it may be wise for an investor to submit their bid right after 12 pm on that 6th day.

The HUD system saves all bids that are submitted by investors or owner occupants when the bids are marked “hold as backup”.  Your Real Estate agent will have the option of marking “hold as backup” when they submit a bid.  I always suggest buyers mark this option on every bid, as HUD does not consider a property under contract until they receive a signed contract.  HUD will not make buyers stick to a bid they mark “hold as backup” if HUD accepts a bid and the buyers no longer want to proceed.  If a property comes back on the market, HUD will review backup bids before they put the property back on the market.

Assuming an investor is able to submit a bid on a HUD home before HUD accepts an owner occupant bid,  HUD will review that investor bid if the original bid cancels and no other owner occupant bids were submitted or deemed acceptable to HUD.  This will give that investor a chance to have his bid accepted by HUD, before HUD puts the home back on hudhomestore for investors to bid on.

This may seem like an unlikely occurrence to have the owner occupants cancel their contract and no other owner occupant bids deemed acceptable.  However, it happens quite often on HUD homes that are FHA uninsurable.

1.  There is a very high cancellation rate for owner occupants on uninsurable HUD homes.  Owner occupants cannot go FHA, without doing a 203k rehab loan and many conventional loans have requirements just as strict as FHA.  Many owner occupants feel they can somehow work out financing on these properties, but end up cancelling because HUD won’t do repairs and the buyers can’t do repairs.

2.  When an owner occupant goes through the process of trying to get financing on uninsured HUD homes, they usually take at least a few weeks if not much longer to realize they can’t make it work.  Even if there were other owner occupant bids submitted on the home, by the time the first bid cancels many of the buyers who submitted bids have moved on and found different houses.   Chances are very good that most of the owner occupant bids will not follow through and will cancel leaving the investor with a chance to buy the property.

How Much Less Will HUD Accept?

HUD gives guidelines for the asset management companies to go by when accepting bids.  In my experience HUD allows asset management companies to accept bids with a net price to HUD of about 11% less than asking price.  The “net” price is a buyers bid minus commissions to agents and any closing costs paid by HUD.  If a buyer bids $100,000 with 3% closing costs paid by HUD then the net price to HUD would be $91,000.  $100,000 -$3,000(listing agent commission) -$3,000(selling agent commission) -$3,000(seller paid closing costs).

If you are wondering if the agent commissions are negotiable, the selling agent commission is negotiable, but the listing agent’s is not.  If an investor is not asking for closing costs then the asset managers can accept a bid of about 5% less than asking price assuming a full 3% commission for the selling agent.

HUD will accept lower bids in some cases where homes have been on the market for an extended period of time.  If a home has been on the market for 60 days or more an asset manager may ask HUD for special approval on a bid.  I am not seeing may HUD homes last over 60 days on the market in my area, but it does happen occasionally.  In my experience HUD will not accept “lowball” offers that are 50% of the asking price, but they may go as low as 20% below asking price on certain properties.

Submit All Bids on HUD Homes

Even if you think your bid is too low for HUD to accept, submit it anyway and have your agent mark “hold as backup”.  HUD will keep the bid in the system and if the price is lowered, HUD will review previous bids in their system before they look at new bids.  If the home becomes an aged asset and HUD has not received other offers.  The asset management company may submit your bid for special approval.  If HUD accepts a bid you made months ago and you no longer want the property, have your agent tell HUD you are no longer interested and HUD will cancel the bid.

Buying a HUD Home as a Wholesaler

I see many questions on the BiggerPockets forum from wholesalers who want to deal with HUD.  Here are a few things for wholesalers to think about.

  • HUD does not allow assignments, a wholesaler will have to buy the home before selling it.
  • HUD will require a proof of funds letter on cash offers.
  • You must send in certified funds with your initial contract for earnest money.

Inspections on HUD Homes

HUD allows investors to inspection HUD homes, but investor will not be able to get their earnest money back because of repairs discovered from the inspection.  HUD does an inspection on each home before they list it, but they are not the most in depth inspections.  Usually the utilities are not turned on and only a visual inspection is done on the furnace, hot water heater and other systems.  HUD does do a pressure test on the plumbing system.  HUD will disclose the inspection results in a document called PCR on Hudhomestore under addendums.  If the plumbing system does not hold pressure, HUD will not allow the buyer to turn on the water.  If an investor is getting conventional financing and the property cannot have the water turned on, make sure you check with your lender to see if that is acceptable.

Do Not Try to Cheat The System

HUD is run by the government and they take their rules and procedures very seriously.  Pretending to be an owner occupant when you are really an investor is illegal and a felony.  HUD can fine someone up to $250,000 and send someone to federal prison for violating the owner occupant rule.  At the very least HUD will immediately cancel a buyers bid and take their earnest money if they find out a buyer is posing as an owner occupant.  If you don’t think you will get caught, there are many investor who would love to bid on HUD homes in the owner occupant period who pay attention to who is buying them and would love to turn in cheaters.

HUD does not allow buyers to make any alterations to HUD homes before closing.  That includes making any repairs, rekeys, storing personal items, or putting a sign in the yard.  HUD also considers it a felony to alter a HUD home before closing.  If HUD finds out any repairs have been made they will immediately cancel the contract and take the buyers earnest money.

Not only will HUD go after the buyers for violating rules on HUD homes they can take action against the Real Estate agent as well.  If HUD thinks an agent is encouraging or allowing a buyer to violate HUD rules, HUD can take away the NAID number from the agents broker.  That means no one from that office can sell HUD homes anymore.

Conclusion on HUD Homes

HUD has a very unique and in depth system that can be very intimidating to buyers and agents who are not familiar with it.  However, HUD homes can provide great opportunities for owner occupied and investor buyers.  I hope this article has provided a few tips to try out with HUD homes.  I have not covered many areas of the HUD process like contracts and closings, but your agent should be able to walk you through those procedures.  Please feel free to leave any comments or questions!

Photo: IM Coach

About Author

Mark Ferguson

Mark Ferguson is a has been a real estate investor and real estate agent/broker since 2002. He has flipped over 165 homes in that time, including more than 70 in the last three years. Mark owns more than 20 rental properties that include single family homes, as well as commercial properties, including a 68,000 square foot strip mall. Mark has sold more than 1,000 homes as a real estate agent and is the owner/managing broker of Blue Steel Real Estate in Greeley, Colorado. Mark started the InvestFourMore blog and website in 2013, which has hundreds of article on real estate. Mark is constantly sharing his insights, case studies, and interesting things that happen to real estate investors on both his blog and well-known sites like Forbes.


  1. Hey Mark! Nice to see you as a contributor now. I read your blog and have always enjoyed your comments on BP.

    So question. You said “You must send in certified funds with your initial contract for earnest money.” Does that mean at the time you bid, or upon acceptance?


      • Hi Mark,
        I have a different kind of question. When HUD sets a price on a home, what would you suggest with your experience. Send in your offer for asking price or higher? If higher do you go up a whole lot. This is all new to me thanks!!! Hope you can help. From CA

  2. Mark

    Great first post! Too many here are posting superficial fluff. Keep up your quality. Thank you for putting real effort into this. Oh yeah, it was helpful too. I’m off to look at the HUD site.


  3. Brandon Turner

    EPIC POST Mark!

    Thanks so much for this. Seriously, this is the best article I’ve ever read on buying HUD properties. I think I learned like 50 new things in this thing. Definitely will go down as one of the all time great, re-visit often, posts.

    Looking forward to having you on the blog. People are gonna love this!

  4. Steve Babiak on

    Great content Mark. I agree with the earlier comment that too many others are just giving fluff in their articles, so I hope you keep up the quality level.

    As to closing costs, I believe that transfer taxes will also NOT be paid by HUD.

    I’m surprised you didn’t encourage the readers to attend the educational events that HUD brokers and agents are offering to buyers and agents. Lots of the content you gave here I originally learned via one of those events. I think those events are a good thing for investors to attend.

    • Hi Steve, thank you. Good point on transfer taxes. Colorado does not have transfer taxes so I’m not used to how those are handled.

      Great idea on attending HUD classes. I have taught a few to local reia groups. Those are a great resource for investors.

  5. Hi Mark! Thanks for the thorough and timely Article!! Very helpful!! I just had a HUD offer accepted recently but I accidentally offered Full price. It was great experience to be able to see the actual process and then how QUICKLY things move once you get a bid accepted.

    Can you explain a little further what the “Period Deadline” refers to. I have just submitted a HUD offer and the Period deadline is 12/21/2013. Does this date refer to the last day the asset management company has to sell the property? Or is that the last day HUD will accept bids? If it is the last day that HUD will accept bids, Do they take the Highest offer at that point?

    • Mark Ferguson

      Hi Lisa, it gets a little confusing with the bid deadlines, but hopefully this will make sense. The only time the period deadline means anything is if the home is in the owner occupant or lottery periods. The period deadline will give the last day for that particular bid period. If a home is in the extended bid period, meaning anyone can bid on it, the period deadline is extended out 5 or 6 months. When the home is in the extended bud period the period deadline doesn’t mean anything.

      To know when the bid deadline is look at the bid submission deadline, it probably lists a few hours right now and HUD will review bids every business day.

      • Hi Mark.
        Thanks a mil!! That helped clarify things a little further. I forgot to mark the little area to “Notify me of follow up comments” so this is why the delayed reply. I am happy I waited because the follow up comments (with your responses) that have since posted have been so very helpful! I appreciate your insights!!! 🙂 I will check out your blog.

  6. “I seriously could have written twice this much on the HUD system, but most of the other details are handle by the Real Estate agent and not the buyer.”

    You should do this Mark, I think this would make a great addition and many of us even if not agents would like to know what occurs behind the scenes. This is one of the best blog posts ive read on this site in a long time, thanks for sharing with us

  7. Mark,
    Thank you for this excellent article! You answered a question that I’ve asked several people and nobody could or would give me an answer. What is the percentage or asking price that HUD will accept. I appreciate your candor and look forward to reading more posts from you.

  8. Hi Mark, great and helpful article. I see that a number of listings in my region have the following disclaimer on them:

    Availability of home is subject to the Asset Manager accepting a bid from an earlier bid period or removing the home from the market.

    Is this standard on extended listings, or only on some of them? Thanks.

    • Hi Alison,
      That is standard on HUD listings. They put that disclaimer on because HUD may accept a bid later in the day that they already received from the previous day or days if it was in the original bid period. It does not mean they have received a bid.

      • Astrid van Boom

        Hi Mark

        Best article on HUD ever!!!!!!

        As a newbie I’m starting with buying and flipping as I don’t have money to go for the big fishes yet. But looking at all the various listing options my Realtors send me, it is mostly foreclosure, short-sales, pre-foreclosure and HUD. Both seem to purchases you can’t assign. Looking at a HUD property now, but see in your blog you have can’t do an assignment of contract.

        I need advice on what properties can I actually go after that I can do an Assignment of Contract. Been reading a lot of blocks, but still at a crossroads.

  9. Great article Mark! I appreciate all the advice. If you cancel before submitting the earnest money, I understand that HUD doesn’t care, they just re-list, is this correct? So you could inspect in the 2 day period between your offer being accepted and when you have to submit the earnest money?

    • Mark Ferguson

      HUD doesn’t like people cancelling contracts, but from what I understand they won’t do anything about it, unless someone is cancelling contract after contract. I heard someone say they though they had been blackballed by HUD for cancelling too many contracts, but it was all circumstantial evidence.
      You are allowed to inspect HUD homes at any time during the listing period, but cannot turn on utilities until your contract is signed by HUD and HUD’s property preservation company has given you permission.

      • I rarely even look at a HUD house before bidding.
        I go on MLS and get an ARV, make a worst case rehab budget based on the specs of the house with some guidance from the pictures and PCR and submit the offer.
        If I get a reasonable counter I will go look at it to tighten up numbers.
        The very few times I got something accepted before I saw it (This was always on a “backup offer” on something that fell through for them) I did drop everything to go see it that day.

  10. Great information!
    We’ve gotten HUD bids accepted as low as 19% of list price. The average for us is 40% of list. This is location specific, of course. The discounts that Mark references are probably typical in most markets.

      • I was going to make a similar comment that the discounts are probably more regional.
        I have not done as awesome on discounts as Travis has, but the MOST I have ever paid for a HUD house is 76% of current list price, and on that one they lowered the price the day they accepted a “backup offer” I had made a few weeks earlier.
        My experience is buying most of mine between about 53-64% current list price.
        BTW this is contract price not net to HUD so discount them by the additional 9% for that.

        So in many areas I would guess (and have heard from investors and agents) that numbers similar to what you said are what they will take. But it is not a set in stone policy.
        You did mention that you encourage people to put in an offer no matter how low to get in the system so hopefully people will take that to heart rather than think “My 40% offer won’t ever be accepted so I shouldn’t even bother”.

        • Shaun,
          From what HUD has told me the asset managers can only accept low bids on aged assets. Are you seeing low offers accepted on homes that have been on the market less tha 60 days?

        • Hi Mark,

          For sure they had been on the market for well over 60 days when I get that kind of discount. Others may have seen it differently but I would doubt that they would take much of a discount before they start just dropping the price a couple times.

          In the article you said:
          ” In my experience HUD will not accept “lowball” offers that are 50% of the asking price, but they may go as low as 20% below asking price on certain properties.”

          This was in reference to properties on the market over 60 days.
          My only point was that this may be true in your area, and likely many others, it isn’t always the case. In my region a stale property can go for far less than this and apparently in Travis’s market they can go for way less than I have ever seen.

          Until any investor has a feel for what HUD may take on a high DOM place they should just throw offers out there, they might get lucky.

  11. Karin DiMauro on

    Great blog, Mark! Thank you for a very detailed and well written article.

    I’m probably mis-reading something, but I got a little confused on the section regarding how much less HUD might accept. You said asset management companies are generally allowed to accept bids with a net price to HUD of about 11% less than asking price.

    In the next paragraph, you said, “If an investor is not asking for closing costs then the asset managers can accept a bid of about 5% less than asking price assuming a full 3% commission for the selling agent.”

    If an investor is not asking for closing costs, then why isn’t the percentage higher (i.e. an asset management company could accept up to 14% less than asking price, for example)?

    My guess is that my confusion might be that we’re talking net to HUD in one place vs. a “gross percentage” in another?

    Thanks again!

    • Mark Ferguson

      Hi Karen, it can be confusing trying to explain the HUD process.

      HUD will accept 11% less net to HUD. If there were no commissions or closing costs HUD would take an offer 11% below ask. There will always be 3% listing agent commission and that takes it down to 8% below ask HUD will accept. Then there may be as much as 3% selling agent commission which makes it 5% less. If the buyer asked for closing costs, then it would only be 2% less than asking price that HUD would accept. So the only time I am using net price to HUD is the 11% number and once the commissions are factored in that number drops to about 5%.

      It gets confusing, but when HUD sends buyers a counter, they use net numbers and buyers will have to add the commissions and any closing costs onto the counter figure HUD uses.

  12. Regarding what you said about HUD allowing “asset management companies to accept bids with a net price to HUD of about 11% less than asking price” with the “net” price being a buyer’s bid minus commissions to agents and any closing costs paid by HUD, should I assume that HUD will initially show the market value of that property I want to bid on so I can know how much clearance I have in order to make a low but acceptable bid?

  13. Great Article Mark as I learned a lot from this and I actually missed an opportunity not too long ago on a HUD home because I didn’t understand the deadlines like you just explained. I am going to share this with my acquisition team and have a meeting review to see if we can pick off some deals this way. Thanks again for a very informative article.

  14. @Mark Ferguson,

    I notice that HUD discounts properties after 30 or so days -give n take a few. I also noticed that they discount properties by 10% of current list price. so if starting list is 100k, if no activity after 30 or so days, new list price will be 90k, then 10% of 90k will be the new list price after another 30 days. I try to figure out if there is a way to calculate negative compound interest, such that one could plug a formula and predict what HUD would want on a property after x amount of days

    • Hi Danny, in my experience HUD lowers the price between 30 and 45 days on the market. And the reduction usually is right around 10%. Each asset management company handles low offers on aged assets differently. It is hard to come up with any formula for what they will try to get accepted by HUD. I think they go on a case by case basis and consider how many bids they have received, agents BPO and other factors. I always suggest buyers to submit a bid, not matter how low, because it is extremely easy to do and HUD may come back to those bids at a later date if the house does not sell.

  15. Stephanie Dupuis on

    Thank you, Mark, for writing a quality article. Your time and thought in writing this is appreciated and it is a wonderful contribution to the BP community.

  16. Hi Mark. Thanks for the informative article. I’ve never bid on a HUD home so this is not something I have experience with. Can you please explain how you would conduct due diligence with the time restrictions.

    • Hi Rachel,
      Due diligence means different things to different people. Are you talking about inspections or selling another house. As far as inspections HUD gives investors and owner occupants and investors 15 days, but only owner occs can get earnest money back. HUD does not accept contingencies. Investors can inspect before they place a bid, but won’t be able to have the utilities on.

      • Hi Mark,

        So to be cautious (and not lose earnest money) you would want to complete an inspection before hand and be 100% sure that you’ll buy if your bid is accepted?

        • Mark Ferguson

          Yes, HUD lists inspection results from an inspection they do on hudhomestore, but it is not very thorough. I would do as much of an inspection as you can and assume you will have to replace some items that can’t be completely inspected.

  17. Hey Mark, thanks for the great writeup on the HUD process. I wanted to ask you about a couple of period/days combinations that we see in our area:

    Exclusive Daily Bidding (ex: 105-145116) – What puts an FHA Insurable home in this phase?? It seems to me that if it didnt sell during normal Exclusive phase then it should go to Extended phase (all bidders). Price appears to not have dropped either.

    Exclusive 10-Day Bidding (ex: 105-130184) – Same questions as above. Also FHA Insurable.

    • Hi Stan, thank you.

      With FHA insurance homes, the bid period for owner occupied buyers is 30 days, but the initial bid submission deadline is 10 days. HUD collects bids the first ten days and reviews them on the first business day after the 10 day bid period is up. If there is not a bid accepted from that first ten day period, then the home goes to daily bid period for owner occupied until the 30 days are up.

  18. Very good article with a lot of meat in it for those that want to learn about HUD!

    You did have this that I wanted to comment on:
    “I see many questions on the BiggerPockets forum from wholesalers who want to deal with HUD. Here are a few things for wholesalers to think about.
    ?HUD does not allow assignments, a wholesaler will have to buy the home before selling it.
    ?HUD will require a proof of funds letter on cash offers.
    ?You must send in certified funds with your initial contract for earnest money.”

    Very true but no different than someone going after REOs.
    Big advantages to HUDs over other REOs are:
    1) Total deposit is NEVER more than $1,000, if the contract price is less than $50K then it is only $500. Yes you can’t get out of it, but often REOs want 3-5% which the property would have to be VERY cheap for that to be less than the HUD amount.
    2) The big one is you can double close with no deed restrictions. No need for buying it with an LLC and selling the company, or doing it in a Trust and selling the beneficial interest, or waiting 30-120 days to season the title. Close on the purchase and go across the hall and sell it for whatever you want!

  19. Truly an excellent post with some actual meat to it.

    I’ve only had a little experience with HUD homes but there is one thing about the process that drives me crazy. It’s their requirement that they are mailed a original copy of the contract signed in blue ink. It’s been a while but if I remember correctly there are sections for the broker and agent to sign also. Not a big deal if I am the one purchasing but for out of state investors, who I work with often, it’s a real hassle. Get contract signed by the broker and me, next day air to buyer, next day air to management company.Ridiculous. I am so used to using electronic signatures that their over the top process is very aggravating.

    I understand the electronic signature companies have been working on them and others to change these kind of requirements. Maybe some day soon they’ll be dragged into the 21st century. Then on a good day they can have their executed contact in an hour. The requirement for the binder is a little more understandable but still annoying, lol.

    Sorry for the rant and thanks again for the great post.

    • Mark Ferguson

      Hi Tim, one thing that may help a little is your broker can give you authorization to sign for him/her. If you send a letter from your broker giving you specifically authority to sign on their behalf, HUD will accept it.

      It is difficult for out of state investors. It does not hurt to email the asset management company and tell them your situation. Let them know you are working as fast as possible and that you have to overnight everything back and forth, they may give you a little extra time. No guarantees though.

      • Thanks for the tip. I didn’t know that and I’m sure my broker didn’t. She would be glad not to have to deal with the rush I’m sure. She’s usually pretty good about doing it quickly but even a few hours makes a difference on the timeline they give when your going Jacksonville, to LA, to Atlanta in 48 hours.

        I usually let them know the situation but have never received extra time. On the other hand I never thought to ask for it, lol. It certainly can’t hurt.

      • That’s interesting about the letter.
        I had not heard that and will need to look into that.

        On my first HUD deal we talked with the asset manager about making sure we got it all filled out right (It was my brokers first too).
        They told us the agent could sign everything except for the actual contract and they needed his original on that.
        So fairly useless…

  20. Amazingly comprehensive article! Thanks Mark, I really enjoyed reading it as I do all of your posts on your own blog. Congratulations on your first article with BP and looking forward to reading many more!

  21. Let me add another to the chorus of “great article” comments! Thanks especially for the clarification about the FHA insured vs uninsured and the resulting difference in length of time it is exclusive. One question on that — is there a way to distinguish the insured vs uninsured when reviewing the properties in the list mode? All I could figure was to open the case details and look at the difference in the List Date vs the Period Deadline. That’s a bit cumbersome.

  22. Follow-up to what I just posted. I see that I had missed the clear indicator of FHA status that is in the case details so no need to do the math on days between periods. However .. still the question of whether there is any way to tell insured from uninsured in the list mode. Thanks very much for the great info!!

  23. Elmer Foster on

    Excellent post. Very good insight. Just discussing purchasing a HUD home with my partner this weekend and we didn’t realize how hard it would be to get earnest monies if we cancelled a contract

  24. Hi Mark – GREAT article, thank you for that! Just to clarify – how can we tell how long a property has been on the market? I’m assuming the original appraisal date would be day 1…

    Thanks again!

    • HUD counts days on the market as how long a property has been active on hudhomestore for bidding. There is no easy way to tell how long that is. Look at the period deadline and that will tell you the last day owner occs only can bid if it is in an owner occupant only bid period.

  25. Lisa Haraway on

    Great Article. I am a realtor also. I am wanting to buy a home in foreclosure with hud for me and my family as a owner occupant. I don’t work for a real estate company that respresents them. I know that is a NO. My broker is having to apply for a naid just for me to put a offer in. How long does it usally take to get a naid # just to submit a offer? We are not wanting to list hud homes just submit a offer. I wanted this home for 10 years. I am scared I am gonna loose it. And even I am a realtor..this hud process is new for me. Any other pointers you can tell me in purchasing. Please share. Thanks

    • Hi Lisa, it can take weeks for HUD to issue an NAID number. If I were you I would partner up with an agent at an office with an NAID number and have them submit the bid for you. You’ll probably have to pay a referral fee, but that’s better than losing the home.

  26. Great advise here. I just bid on my 1st investment home from HUD, Not a lot of info on there inspection forms, i found out the water meter is run through the house behind mine and the meter is on street over. So do your home work before you bid if its older home. Now i have to pay meter fee and connection cost so the meter is on the property. New but learning. The deeds show no easements.


  27. Hi All:
    Very informative article. I’m coming in late to the conversation, but can anyone clarify these two points?

    -HUD will require a proof of funds letter on cash offers. (Do I obtain this from my bank?)
    -You must send in certified funds with your initial contract for earnest money.

  28. What happens if the home is not sold by the period deadline? This property has been listed for several months and is open for all bidders. Do they just keep extending the deadline or does it end up at auction? Thanks for your help!!!

    • Hi Stacey, the extended period deadline is usually 6 months. They will lower the price every 30 to 45 days. It is rare that a property will ever get to the 6 month period, but it is possible they will send it to an auction. I have never seen any in my area go to an auction.

  29. Hi Mark, Just read your blog…great info (wish I would have located your blog a bit earlier!) I have a question on a HUD transaction I am currently working on. I have owner/occupant buyers (not an investor). HUD had completed their pre-listing inspection and provided us with a “condition report” (which included a pressure test) verifying that all systems were in working order. The HUD property was vandalized (I have been advised by seller side that vandalism without forced entry, most likely occurred during winterization process assigned by HUD). The vandalism involved removal of some of the water & heating (copper) pipes. My buyer understood that they were buying the property “as is” however in your experience does that also mean they have to accept responsibility for the vandalism that was not evident when the offer was made? I have been (tactfully) trying to get the asset mgt company and/or the listing agent or the FSM company to give us an answer as to whether HUD will repair vandalized pipes or extend a credit for repair, but I’m not getting any response. My buyers are willing to accept the property “as is” including the vandalized pipes, if that is HUD’s decision, but I can not get anyone to respond. I’m sure HUD must carry some type of property insurance on their properties which may include vandalism coverage. Any suggestions you can offer would be appreciated, settlement is scheduled for later this week. TY, Kathy

  30. Hi Kathy, I am glad you like my blog, thank you.
    As far as vandalism after a contract is accepted HUD may give a credit to the buyers. The listing agent has to send pictures of the vandalism to their asset manager and show what was removed/damaged. Usually the credit is not as much as the cost to repair or replace, but it something at least. it is not the buyers responsibility to accept vandalism that occurred after the contract was signed. HUD will let buyers out and return earnest money, give small credit or let them close as is.

    it can take time to get an answer because they have to ask HUD directly what if any credit will be given.

  31. Hello,

    I was curious as you offer a lot of info on HUD homes. While I do not live in your state, (I found a link to your blog on Pinterest) I was curious if you know anything about the Good Neighbor Next Door program? I looked at one a year ago but the approved agent didn’t seem to know much and miss-guided/confused us so we backed out of a great opportunity. Would you be able to answer a few questions for me should another opportunity arise in the future?

    Thank you,
    Christine P.

    • I know a lot about the good neighbor program. It is very tricky but you can get homes at 50% off. There are only certain homes in the program. You have to work 15 miles within the house. Have to be full time employed firefighter, emt, police or teacher. Your agent gets no commissions from HUD so you may have to pay them yourself.

  32. We place a bid on a hud mobile/ manufactured home. The day after, we found out that an offer had already been accepted and that hud wanted to keep our offer if the first didn’t go thru. My question is how long until we would know if the first contract that was accepted got turned down or not? Certain time frame for them to have everything in order?

  33. Dayne Wright on

    Hey Mark,
    Thanks for the site. I am dealing with an issue in trying to get my earnest money refunded I would like your opinion on. I was bidding on the home to move into. The disclosure information noted damaged wiring. We tried to have power turned on for inspections and the power company said we had to have the property inspected before the power could be turned on because the power had been off for over a year. We got a county permit for and electrical inspection and had it inspected and it failed so we can’t get the power turned on. The inspection revealed much more extensive wiring problems, damage and unsafe wiring issues than we were aware of prior to making an offer / having our offer accepted. At this point we want to back out and have our earnest money refunded as we can’t complete due diligence which includes testing the well pump and even if we could with the wiring being so bad the home won’t pass an electrical building inspection we want out anyway. It seems totally unreasonable that we would not get our earnest money refunded with the house not being able to pass inspection / have power turned on which was impossible to know about coupled with the fact that no repairs can be made prior to closing etc to be able to complete due diligence. I would like to know what your thoughts are on this as well as what if any appeal process is available if we aren’t refunded the earnest money. No decision has been made yet by hud. We have sent in the receipt for the county inspection, the failed county inspection report and the forms for canceling the contract as well as a letter stating why we want to cancel. The fellow at hud hasn’t made a decision yet but has mentioned that damaged wiring is noted on the hud report but my argument is that we had no idea the home wouldn’t be able to pass inspection due to the extent of the damage and that power couldn’t be turned on. How could they expect someone to move forward in these circumstances or not return the earnest money as this would seem unethical?

    • I am assuming you are owner occupied? If so are you getting a loan? If you are getting a loan, can you get the loan with the wiring as it is? You may be able to say you can’t get financing as a result of the wiring not being up to par and get your earnest money back that way. You would need a letter from your lender.

  34. Dayne Wright on

    Hey Mark thanks for the response. Yes this was owner / occupied purchase. I had planned on paying hud cash for the home and sent the statements to show proof of funds etc. I had read that if financing falls thru hud would return the earnest money but unfortunately I don’t think that will be able to be applied with my scenario.

  35. Dayne Wright on

    The PCR covered the issues with the home in a very general way. I’m very upset that the fact that the home failed to pass the electrical building inspection wasn’t enough for the person handling the case to allow us to take a pass on the home. It seems to me that this magnitude of an issue was a new discovery with the property that was previously unknown / undisclosed. Instead the hud guy stated that “damaged wiring was noted on the PCR” but damaged wiring is still a far cry from damage / safety issues such that the county inspector deemed the property not safe to have power restored. I plan on fighting / appealing if I am not given my earnest money back on this as I feel I am in the right here. Do you know in the event of being denied a refund what recourse is available for appealing a negative decision on this?

    It was awful that after presenting documented evidence “failed electrical inspection – resulting in the inability to have power turned on at the home” I was not able to get confirmation that this was enough of a new issue previously undisclosed that would allow confirmation that I would get a refund. Instead I was told by the hud guy that he would have to refer this to management. It will be interesting to follow this home when it reappears on hud for sale to see if they disclose that the wiring is damaged to the point that the home fails electrical inspection and cannot have power restored due to the damages. It seems like there is something in real estate law that would require this disclosure. As far as resolution the jury is still out. I will post here what the final result is. I have actually read on the internet that some conspire to think that not refunding earnest money is a bit of a racket to make money for the contractor’s who sell hud homes. I would like to think this isn’t true but it seems in my case I have a totally valid basis to back out on this house and get a refund and I will feel very wronged in the event that I am not refunded my earnest money.

  36. Dayne Wright on

    WOW I just heard from my realtor that hud is not going to refund my earnest money. So in other works hud is saying that I must stay in contract and buy a home that has failed an electrical inspection and cannot have power turned on? That I have to buy a home that I can not test / inspect the operation of the well / well pump or septic systems due to not being able to turn on power to test? Is it just me or is this terribly wrong? What if the well pump is bad, absolutely no way to know without power? What if the well is dry absolutely no way to know without power? What if there is a major septic tank problem no way to know without water?

    This will be settled by a judge, I will not accept this without a judge making a call on it. It just seems totally and completely unbelievably wrong.

    • Did you talk about the water and septic concerns? Seems like you will do much better talking about wanting to pull out based on the unknown condition of the well and septic and not say that it has anything to do with the bad wiring.
      Harping on the bad wiring being “more bad” than you thought isn’t compelling from that stand point.
      I’d have your inspector write up a report being doom and gloom on those items (within the normal pose all the worst case possible tendencies of a home inspector) then say that is the reason you are backing out.
      Still might not work but it should be a better tactic than saying that the wiring was bad when they can say that they supplied a report telling you that before hand.

      • Shaun is correct. The HUD inspection form is very clear that you cannot cancel for any item that was noted on the HUD inspection as already damaged. Saying the electrical is worse than you thought is not going to be a valid reason to get your earnest money back per HUD guidelines. Your best shot is to use something else that is wrong with the house.

        You have to remember your dealing with the Federal government. Trying to successfully sue them is going to be next to impossible, especially when the documents you signed are pretty clear that they can do what they did.

        In the future I would always have any flaws checked out as thoroughly as possible before sending in your earnest money.

        How bad is the wiring and what will it cost to fix?

  37. Joseph Thomas on

    Mark, exceptional article. You know it is good when people are still reading and commenting so many months after your original post. At least in my area, I believe the owner occupant phase is now only 15 days which is good for investors. The back-up offer strategy you suggested is a good one. As you mention you really have nothing to lose. At a minimum you get first right of refusal at your low ball offer. I put in an offer on a property at 70% net to HUD on Sunday night. They countered back at 83% net to HUD on Monday afternoon, to which we did nothing. To my surprise, I got a call this afternoon (Wednesday) from my agent saying they’ve decided to accept my original bid from Monday. We’ll see how this adventure goes. First HUD property as an investor.

    Dayne, one suggestion I would make for you. Is there a way for you to identify and independently test the circuit(s) that provide for operation of the “well / well pump or septic systems” with a portable generator. I obviously don’t know the specifics of your situation but I know that dealing with wells and septic systems are huge potential liabilities. If you’re able to satisfactorilly test those circuits on your own, you can put your mind at ease one way or the other. If you get them working and they test out fine close the deal and deal with the wiring issue with piece of mind at least for the well/septic lines. If they test out poorly and you know required repairs are extensive/excessive strongly consider killing the deal even if it means losing your EMD. Better to lose $500 or $1000 than $10,000. I haven’t seen it done, but I understand from the PCR’s the use of the portable generator is how they test the electrical system in houses where the power has been disconnected so I don’t know why this approach would not work on a local circuit if you can identify it. Good luck.

    • Joseph, Thank you and you are correct the owner occupancy timelines have changed. I am not able to edit this article, but I have edited the HUD articles on my blog.

      That is a great point about testing the circuits with an outside source. A handyman should be able to bring a generator out and test the well to see if it functions and produces water. if the well does not function then that would be a reason to get the earnest money back.

  38. I have learned so much about going the HUD Way just by reading this article and reading about Dayne’s situation. Yes mark this is indeed a good and relevant article you posted.
    @Dayne did you put up the 500 or the 1000 EMD? Either way I think the portable generator idea and the one about cancelling the contract coz of the septic as opposed to the wiring are the Best ideas i can see right now.
    HUD Can be a great place to find deals. However I have noticed in depends on your market and state. The guys in TX, OH, AZ, NC etc always seem to have an abundance of HUD Inventory, but up in the North east, we have minimal inventory. Combine that with the fact that we already have tight inventory supply.

    But I always take a peek at the HUD Inventory daily. Our HUD Page is usually 2 or 3 pages at most due to low inventory so it doesn’t take much time to decide what to bid on

  39. Heather charlton on

    My fiancé and I put a bid on a HUD home on February 3rd, HUD accepted out bid and we signed a contract the next day and gave her a cashiers check for that hand money.We had not heard from our realitor for a long period of time and when we finally did hear from her she told us that they threw out our agreement. She said that someone else going through adifferent realitor put a bid in on February 20th and their bid was accepted. How is this possible? She is not giving us any answers. We pulled money out of our 401k shortly after signing the contract to pay for the house so we did not need financed or anything.

    Help! Greatly appreciated,
    Heather C.

    • Heather, it sounds like your realtor dropped the ball. If yor bid was accepted HUD does not cancel the contract and accept anything else unless the agent or buyer either don’t send in all the correct paperwork or the buyer or agent terminate. I am guessing your agent didn’t send in The correct paperwork and didn’t check her emails in a timely manner. HUD gives agents 24 hours to respond to correction requests.

      I would ask the agent to provide you with all communication from HUD so you know what happened. If she won’t then talk to her managing broker and tell the broker what happened. If she is the managing broker call HUD and tell them what happened and HUD should tell you why the contract was cancelled.

  40. Hi Mark, thanks for the article it was very informative. I recently attempted to purchase a home from Hud. I aquired a local agent and requested to see the home. my first bid was tor $75,000, hud;s net amount to 69,000, I did get a copy of the bid submission. My agent said that If I wanted to increase my offer that I could just call her. On the last day to submit for owner occupant, I requested to have my bid increased to 80,100. I feel stupid because I did not think to tell her to send me a copy of my increased bid submission. I trusted her, but now suspect that she did not even increase my bid when I asked her too . She called me the next day and said that my offer did not win and I was outbidded and that the only reason she knew was because she overheard another agent in her same office say that there client got the house. I was just on the huds website and saw that the winning bid netted hud 73,180. and was infact submitted through the same realtors office. I suspected that she was lying because I know all she had to do is log in to hud to check the bid status. This makes me mad because my bid should have netted Hud 74,697. I just texted her asked her if she could send me a copy of the bid submission form for my increased bid but she has not responded, Do you think that hud would accept a lower? I believe I was misrepresented on this but because I didn’t do the smart thing and get a copy of my increased bid it probably boils down to her word against mine. I wish there was something I could do. I wanted to report it to Hud,but could not figure out how. I am interested on your take on this. Thank you

    • Hi Frank, HUD only looks at net price nothing else. There is a 1-800 number on hudhomestore to call into. Did you ask for closing costs as well? Just want to make sure the net you figured was correct. Purchase price minus 3% for listing agent, 3% for our agent, unless you negotiated lower, closing costs you ask for.

  41. hi we have signed contract w hud to buy a home the closing was delayed by hud because they did not record deed yet. we had to extend the contract this tues for 15 days. my concern is it may not get done we can extend again. if that happens who do we call to get action asset manager says I don’t know when it will be recorded no other title issues. thanks an email response would be fine

    • Hey Carol, not to worry, you can just continue to file extensions. Just make sure you don’t wait until the last day to do so. Also, make sure you get the verbiage from HUD that they want you to put on the extensions form so you do not have to include payment. We closed on a HUD home in December that we had to file 4 extensions due to unresolved HOA lien during foreclosure.

    • There is really nothing you can do to get them to record title any faster. HUD wants to sell homes fast and they will be working on it. Sometimes there are delays with the county or issues hat need cleaned up before title can be recorded.

  42. I recently got a HUD home under contract as an investor and began marketing immediately as I am a wholesaler. The listing agent (not my agent ) found a sign in the neighborhood and a Craig’s list ad of mine for the property. I would never put a sign in the yard, make any alterations/repairs to the property, etc. He sent a message to my agent saying that I could not go in the house or show the house to anyone until I did the walk-through for closing. Is this within his right to do so? Is there any recourse that I have to get into the property to show my potential future buyers who will buy after I close (this is not even a double closing situation).

    • Hi Elaine, you cannot advertise a HUD home before you are the owner. You cAnnot never go in a HUD him without a licensed real estate with you and the showing must be scheduled with the listing agent.

      Personally I so not think it is right to advertise any house as for sale before you own it. You can tell your private buyers list about it, but you shouldn’t put signs up or ads in Craigslist.

      • I agree that you really can’t ever advertise a listed home unless you have the permission of the current owner, which isn’t going to happen much at all, and never with any type of REO.

        What I find more interesting is your comment Mark about making appointments with the listing agent. I always find the regional differences in these things interesting. I have NEVER made an appointment to go see a HUD house (I’m an agent with a HUD registered broker, obviously couldn’t go on my own without that being the case). I just get my broker’s keys and I go at my leisure.
        In fact about 99% of the MLS listings for HUD homes here say if you are a HUD registered agent that you should just go.

        Our local HUD listing agents are the stereo typical lazy agent though. I have bought like 10 HUD houses and I have only met the other agent 1 time and have a meaningful email exchange one other time. One more time I got an email from one, but that was because she replied all to something the asset manager sent to everyone.
        About half never even took their sign (usually just put a lawn sign in the window, to cheap/lazy to use one with a post) and a couple left the lock box as well.
        One of the first ones I bought I emailed her and let her know I would leave it out for her when we changed the locks when it was still there when we were ready to start renovations. Left it on the front stoop for her for a couple months until the renovations were done and were ready to put it back on the market.

        • That is crazy. I know many old school HUD agents tried to use the same old
          Techniques and then they weren’t HuD agents anymore. We are given strict instructions never to never give out keys to anyone. We have to take pictures of our signs in the yard and send them to our asset managers.

        • So out your way you don’t have the “HUD keys”, aka the set of like 4 keys that should open every HUD lock in the state?

          So the deal here is that any HUD registered broker gets a set of keys from HUD. The agents can take those keys and view any HUD house without any appointment.
          I know there was a little wrist slapping a couple years ago since a lot of brokers were letting agents make their own sets. The regional powers said that was a no no and each agent had to sign out the one set.

          I’m honestly surprised the procedure of just going if you have keys is different in other states, that is a pretty big deal!

        • No, they had one hud key that every agent had to use five years ago. Then they switched to the four HUD keys. At that point no one should have gotten those keys except HUD listing brokers. The keys were supposed to be change every 6 months to ensure buyers and agents didn’t get them. They were only changed once to two new keys.

          All HUD homes are on lockbox and a showing must be set up with listing office for any inspections, showings etc.

          This was a huge initiative to stop vandalism. One company tried to sell HUD keys an st they for fired. What asset management companies are in your area?

        • Yeah that is way different than here.

          The only 2 companies I have seen are Ofori and Associates PC out of Hartford (I’d say they have about 1/3 of the places) and Cityside Management Corp out of the Manchester, NH office.

  43. Sam Crithfield on

    Hi, so I am in the process of closing on a HUD home and have just been notified that their is Federal Tax Lien on the property. This is the second HUD house we are trying to close on because the first one had title problems and we didn’t want to wait a year for them to clear it up. So what does this federal tax lien mean to my potential closing? Will HUD have to pay it before closing or will irs just drop the lien because it has to do with the tax payer who is already in foreclosure with the mortgage company. How long can this take to clear up?

    Thanks so much!

    • Usually HUD can clear up a title issue pretty quick depending on the problem. With the IRS they have a 120 redemption period after the foreclosure sale or longer if your states redemption period is longer. Once the 120 days is up, your title company should be able to insure it and provide clear title.

  44. Hello and thank you for this post and the plethora of information that has been shared over the year. Has anybody heard of the contract management company limiting the number of contract extensions? My buyer is doing a 203k and with bids and other underwriting issues we need another extension but the management company is saying no. The current extension is needed because an inspection has revealed water and septic don’t meet FHA guidelines.

    • Hi Jay, HUD allows to extensions and may allow a third with approval. Usually the reason for the approval comes from an issue with HUD and not the buyer or lender.

      HUD allows more time for 203k than a regular loan, how much time has it taken?

      • The management company has given us four extensions because of the bids required for lead-based paint, renovations, and now the sewer/water issue. I was just wondering if there was a specific regulation limiting the number of extensions. I believe there is a HUD directive but I’ve worked for the government and know these are not hardline rules that must be followed. Didn’t know what others have experienced. This house has been on the market for over a year so I think they want it sold.

  45. We are owner occupants, and I have so many questions about the HUD foreclosure that we’re trying to buy that don’t seem to be getting answered. Let me try to sum this up so I don’t write a whole novel: This home is priced about $40,000 below market value and only needs about $10,000 worth of work (per my dad who is a contractor). This home is FHA insurable, and has a repair escrow amount of $5,280. HUD gave us 3 days to turn on the electricity in order to have an inspection. After receiving the inspection report, we found that one of the two central AC units at the home is not functioning properly, and the other is just 1 degree too warm to be considered fully functional. AC is not a concern of ours, but we are under the impression that local laws require functioning AC. Our agent told us to get an HVAC professional out there ASAP. Our HVAC guy couldn’t come the same day, and said he would come the following morning. By the time he arrived around noon (3rd day of electricity), the electricity was already turned off. The electric company could not turn it back on for just the day and would have to turn it off the following morning, which would make it the 4th day of electricity, therefore HUD would consider this breaking the contract. In order for this home to stay under the allowable escrow repairs it will have to stay under $5,500.. meaning that these repairs for AC will need to cost under $200 (after contingency). Our agent is not being very helpful right now, and sounds keen to the idea of us canceling our offer. However, we told the agent that we do not want to back out just because of an air conditioner, especially when it might just need to be serviced. The agent also told me that HUD will not see our inspection report, and will not know if the AC is functioning during their next inspection, because the electricity will not be on for them either. I am just wondering what our options are since the realtor seems to be giving up on us.

    • Hi Amber, only repairs that are required for the FHA loan can be added into the escrow. If your lender is requiring the AC to work better then you could add it to the escrow, but it can’t go much higher like you said.

      HUD won’t fix it and will not address an AC since they don’t see them as necessary. That seems weird that local laws require the AC to be functioning properly. If you are not concerned about the AC working right then I would buy the house.

  46. We got an accepted offer on a home for 78500 in Florida. We are investors looking to eventually rent out the home. Because of a clerical error that the title company saw, we had to sign and send in a correction paper and $375 extension fee. We have already sent in the $1000 earnest money. Our RE agent calls last night and says that the contract was not accepted. Now, there was no reason given but she said the earnest money and the extension money is non refundable b/c we are investors. Doesn’t sound right to me considering we have followed the rules up to the point HUD cancelled our contract. Please advise. The earnest and extension money is the crux of my concern here. The cancellation is secondary. Thanks

    • Hi Jeff,
      What do you mean the contract was not accepted? Do you mean they did not accept the extension? If your earnest money is in jeopardy then the contract would have already been accepted by HUD.

      HUD has very strict guidelines on when an extension has to be received. If your extension was sent in late then HUD will cancel your contract. You need to find out why your contract was cancelled because the only reason HUD would cancel it is if the contract expires or the buyer requests it.

      Who’s fault was the clerical error? Was it on HUDs end or your lender?

      If you sent in the extension too late then you are out of luck getting any of that money back.

  47. Great article! Very informative!

    I do, however, have a question. I submitted an offer on a HUD home as an investor. My offer was accepted and I now have 2 business days to send the signed contract. Can the name on my contract be different than the one on my original bid? My reason for asking is I’d like to put the contract in a single property LLC in the event I choose to wholesale it. I didn’t realize that HUD contracts could not be assigned but I am hoping I may be able to redeem myself because I am technically not under contract get. Any thoughts?

    Thanks in advance.

    • Shaun Reilly

      Mark can correct me if there are any new HUD regulations that change this as I have not bought a HUD house recently.

      That being said I think you are up the creek. It MIGHT be possible but will be a lot of BS to do it. One of the more recent ones I bought they made a huge deal out of the fact that the deed they proposed didn’t have “LLC” after my company name. They wanted to do all sort of amendments just to add that.
      (Luckily I pointed out the original offer DID have LLC in it and in emails between attorneys and the asset managers they just dropped it for convenience and they dropped the protest)

      Now there aren’t any restrictions on HUDs once you buy them so you can double close the wholesale in your own name to the end buyer or if you don’t have someone lined up you can just deed the place to your own company right after closing.

  48. I’ve got a situation involving the purchase of a HUD property and my proof of funds and was wondering if Mark or anyone else have had, or have heard of, a similar situation. Basically, my bid was excepted and I sent in the contract package (I’m my own Realtor) with my EMD and proof of funds which was my LLC’s bank statement from 2 months ago. Since that time I bought a few more properties, rehabbed them, and are now for sale with 2 due to close next week. Both are cash deals with people I’ve done business with before, so I know they will close no problem. Problem is, even though I will have more than enough cash to close well within or before the 30 day period, it’s not in my account today to show the amount to cover all of the purchase price and the asset manager has requested a statement no older than 30 days. This is actually my 1st HUD transaction and didn’t think the statement needed to be that current since I have used proof of funds over 6 months old to purchase reo’s multiple times before. I figured as long as I can close, that’s all that should matter. And I will be able to close, provided I can figure something out with the asset manager to buy me a week to show the proceeds from my upcoming sales. Any ideas on how I might be able to pull this off? By the way, I am not trying to wholesale the property or anything along those lines. Any thoughts would be much appreciated!

  49. The listing agent showed us a hud foreclosure that had been under contract. He told us the buyers canceled and that it would be up for sale in a few days. It has now been 3 weeks and it hasn’t been re-listed yet. Hud and the asset management company both show it as sold in their systems. We really want this house! What can we do?

  50. We have an accepted bid on a HUD home on a two acres but we have title issues due to a mobile home 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!

  51. Danny Pritchard on

    Mark, good article. I have purchased 6 HUD houses as an investor with no problems till the last one. The title company could not give us a clear title. HUD replied the title was good so we went to another title company that used their title company as an under writer. Still no luck with a clear title. HUD’s response was we should request to cancel the contract. We did cancel with the explanation we could not get a clear title from two companies. We were then told the 1,000 dollar deposit was forfeited to HUD.
    Please advise,

  52. I am a buyer and I placed an offer on a HUD home which got accepted. However, within 2 day window period my agent who was suppose to send them the paper work forgot to get it signed by me. They have received the package and the check as well. My initials are on the papers but forgot to sign it. Do I still have a chance to get that home or are they going to cancel the contract. Please advice


  53. Jennifer murray on

    Hello! I am in the process of buying a HUD home. The home I am buying has not had power in over 3 years. According to our local power company I have to have an electrician come to the property to see if any repairs need to be made and then the county must come out and approve everything before the power can be connected. Of course there are repairs that must be made. It clearly states that the buyer cannot make repairs before the closing date. I opted to have an inspection with the power off. Now it is time for the appraisal and the power has to be on for the appraisal to be conducted. So my question is who pays for the repairs in order for the power to be connected?

  54. Tyler pertree


    I hope you are still answering questions 🙂 I saw something on HUD’s website that I was wondering about. There was a listing in my area with the bright red NEW sticker next to it. However, once I looked inside the listing itself – it says “List Date: 08/04/2015” – so… what gives? Is the listing date the first date it was available on the HUD website?

  55. Connor Streit

    Quick question,

    Say HUD accepts my offer as owner occupant. The house I am currently looking at has 3 bedrooms upstairs and the potential to add a fourth bedroom downstairs once an egress window is added. Would it be illegal to rent out the three bedrooms upstairs, but leave the forth bedroom empty as an owner occupant?

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here