A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

When a HUD Home becomes available for sale, it is listed on HUD Home Store (and usually on the Multiple Listing Service). Any real estate broker who is properly registered with HUD may submit contracts for purchase. Brokers are used because of their expertise in the local residential real estate market and because HUD does not have sufficient staff to show properties to prospective buyers or to assist in those other aspects of homebuying normally handled by brokers.

Before HUD properties are publicly listed for sale, they are first evaluated to ascertain if they qualify for direct, exclusive sale to units of local government and FHA-approved nonprofit organizations. Generally, these properties are located in designated Revitalization Areas.

HUD properties that are not sold under any special programs are listed on HUD Home Store and offered on an exclusive, priority basis to owner occupant purchasers (people who are buying the home as their primary residence). Following the Exclusive Sales Period, unsold properties are then made available for purchase to all interested buyers, including investors, under the Extended Sales Period.

HUD Home Store$1 Homes sales are HUD properties that have been offered for sale for 180 days and are not under a sales contract. These homes will be offered for purchase to local government agencies for a sales price of $1, along with applicable closing costs.

HUD Homes are sold in their "as-is" condition. HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase. Because of HUD's as-is policy, HUD Homes can often be a great opportunity for those homebuyers in search of a "fixer-upper".

Not every HUD Home needs fixing up, but when one does, it can be a real bargain. For example, HUD's asking price on the home reflects the appraised value in its current ("as-is") condition, unless otherwise specified.

While HUD does not provide direct financing for the rehabilitation of REO properties, FHA does provide rehabilitation financing assistance through the 203(k) Rehabilitation Loan Program. Also, keep in mind that on most sales the buyer can request HUD to pay up to 3% of their financing and closing costs.

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