Once you’ve located a HUD property that you’re interested in, you’re going to need to know the process of purchasing a HUD home. Bids on homes are required to be submitted through a registered real estate broker, who typically will submit the bid via HUD’s online bidding process. The winning bidder is notified by the management and marketing companies when the bidding period is over. You should be prepared to submit a deposit that depends on the selling price of the property. This deposit will be submitted when your bid is acknowledged as the winning bid. You would then have two days to submit the signed sales contract. This will also be submitted through your broker. A settlement date will then be scheduled where the process is finalized.
During these two days you should also obtain a lender’s pre-qualification letter. This does not necessarily mean that you have your financing finalized, but you must be able to at least prove qualification. Although HUD wants to sell their transferred property as quickly as possible, they do not want to sell to a buyer who may not be able to afford the house.
Keep in mind that the two day time frame for the contract package (made up of the deposit and pre-qualification letter) is very important. If you fail to submit these documents within the time frame, your winning bid will be cancelled and the house will then be passed down to the next highest bidder.
You should also know that first preference for bidding goes to owner-occupiers. If there are not any bids for the specific property at the end of the allotted bidding time then the bidding is opened up to other investor-related interests.