What Is A HUD Home?
• HUD Homes Come From FHA Loans • FHA Loan is Made By Banks, NOT By Government
– It is guaranteed by government

FHA Loans
• 203(b) Loan
– Standard FHA loan with fixed rate – 1-4 Family Units with Owner Occupant – Roughly 3.5% Down – Maximum Loan Amounts

FHA Loans
• 203(k) Loan
– Same as 203(b) except allows funds for repairs – Must need at least $5000 in repairs

• Other Loans
– Energy Efficient Mortgage – Graduated Payment Mortgage

What Is A HUD Home?
• FHA Loan Is Insurance Policy Against Default
– Borrower pays premium at closing

• Idea Of Insurance Is To Be Made Whole
– If borrower defaults, government gets

What Is A HUD Home?
• When Foreclosed, Home Goes To HUD • HUD Sells At Best Price Possible

After HUD Acquires
• HUD Completes An Inspection Of Property
– Called “Property Conditions Report” – Classified
• IN - Will qualify for FHA financing again • UN – Will not qualify for FHA financing (Major repairs needed) • IE – Will qualify for FHA with needed repairs (203k)

After HUD Acquires
• All Properties Rekeyed Immediately
– Same key used on all properties – Everyone has a key

• Be Aware If UN, Buyer Can NOT Get Any FHA Loan • If IE, and FHA Loan Obtained, MUST Escrow Funds For Repairs

How HUD Homes Are Sold
• HUD Makes Large Deals To Sell Homes
– Called “Broad Listing Brokers” – Currently: Pyramid Real Estate

Pyramid Real Estate Model
• Major Reason They Have Contract
– Technology ahead of its time – Systems in place – Online bidding (BidSelect)
• Been using for years

How HUD Homes Are Sold
• Broad Listing Broker Sub-Contracts With Local Brokers – Listing brokers make little comparatively

How HUD Homes Are Sold
• Local Listing Broker Places In MLS • To Represent Client, Buyer’s Broker Must Be Registered To Work With Government
– Must obtain NAID Number
• Federally registered entity • Recertified each year

Offering On HUD Homes
• HUD Homes Are Auctioned • All Bids Accepted Online
– –

Offering On HUD Homes
• Each Buyer’s Agent Must Have “Buyer Center ID”
– Username and password assigned to NAID – Authenticated by license number and SSN

• Created on Auction Websites

Offering On HUD Homes
• Auction Periods (Mon-Sun Period):
– “Good Neighbor” Period
• Firefighters, Police, EMS, Teachers, NonProfits, Other Government Agencies

– Owner Occupant
• Must live in the property as primary residence • Huge fines if you violate this

– General Purchaser (Reviewed Daily)
• Investors and all above

Specialty HUD Program
• If A Home Does Not Sell In 6 Months, HUD Offers Property To Government Agencies and Non-Profits for $1

Bidding Tips
• Investors Should Bid During Owner Occupant
– Bid will not be reviewed day after Owner Occupant phase – Bids during this phase will hold priority

• HUD Will Tell You What They Will Take!
– If you make a very low bid, you’ll receive an email indicating exactly what HUD will sell the property for!

• Don’t Assume Others Aren’t Bidding

Bid Review
• Acknowledged
– Means they accept pending contract approval – Must send documents within 24 hours
• Overnight service

– All documents prepared automatically – Paperwork must be PERFECT
• They will require everything to be sent back • Some buyer signatures, some agent, some broker

Bid Review
• Reviewed
– Offer was looked at but wasn’t “Acknowledged” – Email sent explaining
• Acknowledged another offer • Offer too low, What HUD will accept

FHA Financing Incentive To Buy
• As of January 2009
– $100 downpayment **** – Closing cost credit for full priced offer – $500 agent bonus
• Client Can Get Better Deal Negotiating

• Streamlined 203k financing
• Inspections and Appraisals already complete and paid

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