What are HUD homes and what is the process to buy one?

Department of Housing and Urban Development (HUD) residential foreclosures are available throughout the United States. The sales process for purchasing a HUD home isn't quite the same as you'll encounter when buying a home from an individual, so take a few notes before you go home shopping.
What is a HUD home?The Federal Housing Administration (FHA) is a part of HUD--the part that provides federal mortgage insurance. If a foreclosed home was purchased with a loan insured by the FHA, the lender can file a claim for the balance due on the mortgage. FHA pays the lender's claim, then transfers ownership of the property to HUD, which sells the home.
Why should I consider a HUD home?
These homes are typically well below market value. They are a great investment to consider and most are in good condition and need very little work. Ask your realtor for detailed information on the properties you are considering.
How much do HUD homes cost?HUD homes are appraised, then priced at fair market value for their location. The price of a home in need of repairs is adjusted downwards to reflect the investment the new owner must make to improve the home.
Will HUD make the repairs?HUD homes are sold as-is. The new owner is responsible for all repairs and improvements.
How do I find a HUD home?You can view HUD listings by contacting a real estate agent, or visit http://mollyhay.yourkwagent.com
When you've located a home you would like to see, any HUD-approved real estate office can show you the property. HUD employees do not work with home buyers--you must use an agent.
Do I simply make an offer to purchase a home?HUD foreclosures are sold using a bidding process. There's an Offer Period, during which sealed bids are accepted from your agent. At the end of that period, all offers are opened. HUD will generally accept the highest bid, or the bid that brings them the highest net.
If the home remains unsold after the initial period, bids are opened as received.
If your bid is accepted, your agent will be notified within a day or two. You will be given a settlement date, usually 30-45 days from the date of your accepted contract.
HUD will pay the real estate agent you are working with. The agent that submits the online bid will be the agent getting the commission.
Will HUD finance the home?HUD does not finance homes. You'll need to arrange for conventional or other financing prior to placing a bid on a HUD property. If your bid is accepted, and you do not close on the house, you may lose the earnest money deposit you submitted with the offer.
Should I have a professional home inspection?Home inspections are recommended for any home purchase. You should inspect a HUD foreclosure before you make the offer to purchase. It will help you determine a bidding price, especially if repairs are required.
Homes build prior to 1978 may contain lead paint, so learn more lead paint hazards before making an offer. Other items to consider are asbestos content, buried storage tanks, and other environmental hazards.
Can I buy a HUD foreclosure for investment purposes?During the initial offering, HUD homes are usually available only to those who wish to live in the home. If an owner-occupant does not bid on the home, investors are allowed to enter the bidding process. Your real estate agent will be able to find properties on daily bids that are open to investors.
Does HUD offer other programs?If foreclosures are not sold within six months, HUD will sell them for $1 each to approved nonprofit organizations and government agencies. Homes must then be used create housing for families in need or to benefit neighborhoods.
HUD offers special home purchase programs for teachers and full time law enforcement officers.
For a limited time on HUD homes in Ohio, there is an incentative with only $100 down and HUD will assist you with $2,500 towards closing costs, prepaids, etc.
This is a great time to look at HUD properties if you do not have 3.5% down!!!