What is a HUD Home and is it the Right Home for you?

Owned by the U.S. Department of Housing and Urban Development, a HUD home is a kind of residential foreclosure. When a home financed by a Federal Housing Administration (FHA) loan goes into foreclosure, the original lender gets reimbursed by HUD for the outstanding loan balance. HUD then takes over ownership of the property and sells it to compensate for the cost it paid to the lender.

What’s different about buying a HUD home versus another home?

When a regular home is listed for sale, the seller works with their real estate agent to come up with a price based on comparable houses in the area.

 

However, when a HUD home is put on the market, it goes through an appraisal process to determine its fair market value. The list price also takes into account any necessary repairs that are needed in the home.

With a normal listing, you’d tour the house and ask your real estate agent to make an offer. While you still tour HUD homes with your agent, the offer process is completely different. Rather than making a traditional offer, you instead bid on a HUD home. Only certain agents are able to make HUD home bids, so you’ll need to seek out a pro who’s experienced in these types of sales.

Each HUD home has a designated bid period. Once yours is submitted, it will be compared to any other bids that have been received. If yours is the highest offer, you’ll get an acknowledgment from HUD.

What is the buying process like for a HUD home?
You often only get one shot at placing an offer on a HUD home, so it’s important to develop an informed strategy beforehand. While you may think that a HUD home warrants an automatic lowball offer, this isn’t always the case, especially if you live in a competitive real estate market like Denver.

Ready to start checking out some Denver’s HUD home options? Contact Metrowest! We specialize in these types of sales and would love to help you start the process.

 

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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