HUD Homes: How to Find and Buy Government-Owned Properties
HUD homes are properties that were foreclosed on by lenders who had FHA-insured mortgages. When the foreclosure is complete, the property transfers to the U.S. Department of Housing and Urban Development (HUD), which then sells it to recover the insurance claim. These properties are sold as-is through a bidding process on HUDHomeStore.com.
How HUD Home Sales Work
- FHA-insured mortgage defaults and property is foreclosed
- HUD takes ownership and lists the property on HUDHomeStore.com
- Owner-occupant priority period: first 15-30 days, only owner-occupants can bid
- Extended listing period: after priority period, investors can bid
- Highest net bid wins (HUD evaluates based on their expected return)
Finding HUD Homes
Go to HUDHomeStore.com and search by state, city, or zip code. Properties are listed with photos, property details, and the listing price. You must submit bids through a HUD-registered real estate agent — you cannot bid directly.
Bidding Strategy for Investors
- Wait for the investor period — do not bid during the owner-occupant priority period
- Bid net to HUD — account for any seller concessions HUD may be offering
- Start below asking — HUD properties often sell for 10-30% below list price after extended listing periods
- Be patient — if your bid is rejected, you can rebid. HUD may lower the price over time.
- Use cash or hard money — HUD properties are sold as-is and many need significant work that conventional lenders will not finance
Pros and Cons
- Pro: Below-market pricing, especially after extended listing period
- Pro: Clear title (government-owned)
- Pro: FHA 203(k) financing available for owner-occupants
- Con: As-is condition, often with significant deferred maintenance
- Con: Owner-occupant priority period delays investor access
- Con: Must use a registered agent to submit bids