HUD homes for sale are FHA insured loans that are foreclosed and HUD has acquired possession of the HUD houses.

HUD assigns the HUD house to a Management and Marketing Contractor. The Management and Marketing Contractor contractor has cleaned it up the HUD house and had it appraised by a FHA appraiser.

The rules for purchasing a HUD homes for sale are differing for home buyers (HUD refers to them Owner-Occupants) and investors. This article is written for home buyers, not investors, and I will discus the things they should know before making a bid on a HUD house.

1. Who can buy a HUD home for sale? Hardly any one can buy HUD homes on the market along as you are allowed to get a mortgage or hold cash. There are no restrictions on who can buy HUD houses.

2. Loan pre-approval. You shall need a pre-qualification letter from a lender or proof of cash money equivalent greater than the house that you are investing in. HUD most certainly will not carry out a HUD home loan to purchase a HUD home on sale. Financing arrangements are up to you.

3. HUD homes being sold are available in "AS-IS" condition. Meaning HUD does not do repairs. They do provide a Property Condition Report on some HUD home listings but no all. These reports are much like home inspections. The problem with buying a HUD home listing is you cannot do a full inspection before you make a bid. You have to have a signed accepted contract from HUD before you can have the utilities turn on. You may have an inspection done following you have an accepted contract.

4. Earnest money. The earnest money requirements are $1,000 if the market price of the HUD house listing is exceeding $50,000 and $500 if the market price is below $50,000. It needs to be in the fashion of a cashier check, official bank check, or money order. If you change your mind about wanting the HUD home your earnest money is not automatically returned.

5. Real estate agent. To give bids on HUD properties on the market you are required to use a real estate agent. The bidding procedures is done on the internet by an approved real estate agent. You need to connect an knowledgeable real estate agent in buying HUD homes. An beginning agent will cost you thousands of dollars in faults.

Purchasing HUD Homes for sale is a lot different than investing in a place from a seller-owner. Even before you make a bid on a HUD house you have to do the necessary research and learn the opportunities and pitfalls of buying a HUD home for sale.