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The "Frequently Asked Questions" section is intended to give general guidance to first-time purchasers and others who may be interested in participating. Further detailed information, instructions, documents, and forms are provided in other sections of this web site. Potential buyers should contact and work through a HUD registered broker when choosing to purchase a HUD home.
General Questions/Buying a HUD Home
Q. What is a "HUD Home"?
The Federal Housing Administration (FHA) is a department of HUD that insures certain mortgage loans for lenders. If the lender forecloses on the loan, FHA repays the balance of the loan to the lender and the title to the home reverts to HUD. HUD then sells these homes at market value.
Q: How do companies like First Preston Management get the house?
HUD has assigned the responsibility to maintain and resell the home to First Preston, Southeast Alliance, and other companies as Management and Marketing contractors. We handle all the physical upkeep work of property management, and all the required paperwork associated with marketing and selling the home according to HUD policies and guidelines given to us in our contract with the federal government. First Preston acts on HUD's behalf, but HUD retains the title to the home until it is sold.
Q: Who can buy a HUD home? Are they only available for low-income buyers?
All HUD homes are offered without regard to race, color, religion, sex, national origin, handicap, or familial status. Anyone who is pre-qualified for a mortgage loan may offer to purchase a HUD home. These homes are not exclusively for low-income buyers, but most are regarded as affordable for low to moderate-income purchasers within the market areas where they are located. There is an initial period when only owner occupants are allowed to purchase, after which time investors may also buy. No employee, relative, or business relation of First Preston or its subcontractors may purchase any of these properties.
Q: How do I start the process of buying a HUD home?
Start by finding a real estate agent in the area where you are interested who works for a HUD-registered broker. Be sure to ask if his or her broker is registered with HUD to sell these homes. These agents can help you get pre-qualified for a loan, show the available homes to you, write a Sales Contract for you to sign, and place an offer by electronic bid on your behalf.
Q: Is it possible to get a list of the properties in my area?
You may keep informed about available HUD homes by viewing the property listings on this web site. Start on the Home Page and click on HUD HOMES. This will give you the current list of homes in those cities that are available for sale. This information is updated constantly, so always check before you go out to see a particular property.
Q: Some HUD owned houses might not be in good condition. Does HUD make repairs?
HUD homes are sold "as is," without warranty. That means HUD generally will not make repairs except to preserve and protect the property or to eliminate a major safety issue. Known defects are reflected in the price and stated in the listing on the web site, as well as on the Property Condition Summary sheet posted in the house.
Q: How do I make an offer to purchase? What happens after I place a bid?
Your HUD registered real estate agent or broker must place an offer in the form of an electronic bid on your behalf. If your bid offers the highest price, net of closing costs and commissions, above the minimum acceptable price, then the bid will be acknowledged, assuming all other considerations are met. The bid will be the acknowledged bid listed in "Bid Results," allowing your agent or broker 48 hours to submit to the appropriate First Preston Regional Office the complete and correct Sales Contract package with all addenda signed, a copy of the loan pre-qualification letter, and a copy of your earnest money check. A thorough description of how to complete this all-important contract package and get it in correctly and on time is given in the Guidebook for Real Estate Professionals. Only when a complete and correct contract package is in hand on time will First Preston sign on behalf of HUD as Seller. Otherwise, your bid may be cancelled and the property may be offered to the next highest acceptable bidder, or it may be placed back on the market for others to bid.
Q: Can I buy a HUD home as an investment property?
Owner occupant purchasers are given priority for the first 10 days that the house is on the market for the general public. These are persons who will affirm in writing that they have not purchased a HUD owned property in the last two years and they will live in the home as their primary residence for at least one year. After the initial 10-day listing period, investors may purchase the houses for resale or for rental.
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