Dear Jan

I keep seeing homes on the web that refer to a HUD case number. What does that mean? Should we buy one of these homes?

MDW

Dear MDW:

The homes that you are seeing are owned by the US Department of Housing and Urban Development (HUD). The previous owner of the home had a loan guaranteed by HUD. When they failed to make their payments, eventually the home would have gone into foreclosure. Since HUD backed the loan they became the new owners.

HUD has its own website — www.hud.gov. Once you enter the case number on the site, it takes you to the info about that home.

With HUD homes, it is a bidding process to buy. Find a local real estate broker who knows the site well and has already registered with the site as it can take weeks for the “approval to bid” to come from HUD.

Bids are taken for owner occupants during the first part of the listing period. So if you intend for the home to be your year around home you can bid then. After a certain date, if an owner occupant has not bought the home, then investors can bid on the home. They do not have to live in the home.

There are all sorts of rules to follow. Structuring your offer becomes an art; a well seasoned broker knows how to structure the bid so that your bid “wins”.

All offers are reviewed on the “bid opening dates”. When they look at the offers, they are after the highest or best offer. You could have the highest offer but get beat out by another bid that is better. Better? Yes, perhaps it is cash. Or has no contingencies. It is purely up to the person assigned by HUD to review the offers and decide which bid to go forward on.

Some HUD homes can be an excellent buy, however, HUD homes are sold “as is” so you could end up with a lemon. You need to use due diligence and seek answers to your questions up front. Yes, you can have an inspection but HUD will fix nothing.

So yes, after careful consideration, a HUD can be worth bidding on. Best Wishes!

Jan Z