Casual real estate observers often conflate foreclosures and HUD-listed properties. Foreclosures are properties that banks outright own, either through foreclosing on a property owner or purchased by the lender. These properties are listed on the market for sale by the lender, often through an auction process but not always. The two categories of homes for sale share little in common other than the fact that the regulating authority, aka the government, is in charge of some aspects of the sale of these properties.
What is a HUD Home?
The US Department of Housing and Urban Development, or HUD, maintains a large housing stock throughout the country for various purposes related to their mission, which includes preserving and building local communities, expanding home ownership and leasing opportunity, and stabilizing housing-related credit markets. HUD Home listings are properties placed on the market by HUD. By definition, HUD homes are 1 to 4 unit, residential properties that HUD seizes due to foreclosure actions on an FHA mortgage. After the home has gone through the foreclosure process, HUD takes possession and enters the property into their HUD home listings database.
How Do You Buy a HUD Home?
HUD homes listed by the government are available to anyone that has the necessary capital or loan approval to match the purchase price. Once a HUD property hits the market, it is initially available only to owner-occupant purchasers. Owner-occupant means that the people that purchase the home are buying it to serve as their primary residence. After this “priority period” which can last anywhere from 7-180 days depending on the type of listing, the home becomes available to all buyers on the market. To see if there are any HUD properties for sale in your area, view comprehensive HUD listings here.
What is a Foreclosure Home?
Foreclosure homes are residential properties that
What is a foreclosure? When a homeowner doesn’t pay his or her mortgage for an extended period, the bank or entity that lent that money takes possession of the home—which means the current owner must move out. Foreclosures make up about 1% of housing stock in a given year. In times of financial crisis, the percentage of foreclosure stock usually increases, with the number of foreclosed homes rising to about 3.5% at the height of the 2008-2009 mortgage crisis.
How Do You Buy a Foreclosure Home?
The first step to buying a foreclosure is to search foreclosed home listings. Large banks, mortgage lenders, and government/private hybrid agencies like Fannie Mae and Freddie Mac all list foreclosures for sale on their websites. After locating the foreclosure property that interests you either you or your agent contacts the agency/bank that owns the property to begin the sale. There are real estate professionals that specialize in foreclosed homes, and while they can help with the process, working with a foreclosure specialist is not an absolute necessity.
HUD Homes vs. Foreclosures Recap
A HUD home is generally a foreclosure, but not all foreclosures are HUD homes. To see a full list of HUD and standard foreclosure properties available for sale near you, check out our comprehensive home database.