If you’re a first-time buyer you probably have seen HUD homes pop up here and there in your property searches. HUD homes can be great deals; however, purchasing one is different than a traditional sale. Here we’ll provide an overview of HUD homes and how the bidding process works.
The Department of Housing and Urban Development (HUD) requires that you submit your bid through a licensed agent or broker who is registered to make offers on HUD homes, so step one is finding an agent experienced with these types of sales.
To get the most bang for your buck – and to boost your chances of buying the HUD home of your dreams – consider these tips as well:
- You’re not obligated to offer the list price. You can offer below the asking price, if you feel you are justified in doing so. These types of foreclosure homes are often priced below market value, but not always. HUD homes are usually appraised by a professional home appraiser before being listed on the HUD site, but you’ll need to evaluate the price just like you would with any home purchase.
- Consider how long the listing has been on the market. You can generally get a better deal on HUD homes that have been on the market for a while, when compared to a new listing.
- Rule of thumb: For a new listing, you should offer an amount closer to the list price. Making a low-ball offer on a new listing will probably just be a waste of time. What’s worse, you could lose the property to a higher bidder.