What Makes A Foreclosed Home Become a HUD AND NOT A REO ? DIFFERENCE ?

Im curious is to why some homes are called HUD AND they get foreclosed on just like REO Do right OR am I confused on how it works.

I mean what makes a HUD home A HUD Home ?

REO’S are just bank owned because the owner defaulted and no one wanted it at auction Right so how come some homes are sent to HUD and some are sent to being corporate owned ???

I wanted to bid on a HUD Home and flip it but the say on HUD The owner occupants get the chance first. How long do they get to bid on it usually a week ?

Can a investor purchase and flip a HUD home with hard money or cash after the first owner occupant bidding is over ?

Im curious is to why some homes are called HUD
Any property that when purchased, the buyer had their (PMI) Private Mortgage Insurance as HUD. The insurance is paid by the homeowner and the insurance insures the lender will not loose much during foreclosure. This is as simple as I can explain it.

How a home becomes a HUD home is simple. If at auction there is not a buyer, the bank gets the home, but prior to the auction the PMI company works with the lender by having guidelines set forth that the lenders follow to try to avoid the auction. You see, if the auction takes place and the public doesnt buy it, the PMI company has too from the lender due to the insurance paid by the homeowner. SO the home transfer after auction from the homeowner, to the lender, and then to the PMI company whio is now the owner. The PMI company paid the lender to curb the lenders loss!

Now HUD then lists the homes for people to bid on via the assistance of a realtor. The company or firms that handle this for HUD changes hands from time, to time; and they usually handle ALL HUDS for 1, or 2, or sometimes 3 states at a time. I think your time frame of one week is correct but you can call them to find out. Good luck if you get one under 75% of the listing price though. Around 10% was the norm last I knew. Anyone can buy a HUD home using cash, fix it and sell it. Options is not doable.

If a homeowner doesnt have (PMI) and the home goes to auction, and the public doesn’t buy it, then the home tranfers from the homeowner to the lender where it becomes banked owned, aka Real Esate Owned (REO).

Now, banks then have an REO department and this department re-lists the property with Realtors, back onto the MLS.

Thats about as simple as I can explain it. Hope it helped you understand everything better.

Just to add to what the last dude said…

In many states HUD homes are listed on the MLS just like any other home…the main difference is that you don’t turn your offer into an agent the normal way, your agent actually submits your offer electronically online.

If you want to find out about HUD homes in your area visit www.HUD.gov and look up your state.

One more thing, don’t make the mistake of getting caught up in buying a certain % below the asking price, instead focus on buying at a certain percentage below FMV…Quite often HUD will list homes at ridiculously low prices and you’ll end up missing them if your just going off a percentage below.

An example would be a home that I just did…The home went into foreclosure at $95,000 and HUD was asking $23,000, If I would have bid at 80% below asking price, I would have missed it. Instead I bid $100 over asking to ensure that we would get it.

Never lose sight of opportunity cost…the cost for me to miss that opportunity would have been $20,000+ in profits…

good luck

The HUD price can be too low. There was a $48k HUD home that sold $15k above list, multiple offers involved.