Mortgage rates are rising and show no signs of improving any time soon. Couple that with multiple offers due to the limited housing market, and you can expect that buyers will be dealing with some frustration. Something to consider, depending on the buyer, is a “HUD Home.” A Department of Housing and Urban Development home can be a great alternative for a home buyer that is handy, or knows someone that is. Yes, these have been forfeited or lost, but no, that does not mean that they’re not worth at least looking at.

The higher number of HUD homes within a specific area means that the area was hit harder financially. These areas may have experienced a large number of layoffs or recession, so it may be a good idea to have a conversation with your buyer and make sure that they are comfortable in that neighborhood and aware of the surroundings. Explain thoroughly what your buyer will be facing with a HUD home purchase. It’s a residential property that an FHA buyer foreclosed on. HUD becomes the property owner and because they aren’t in the business of selling homes, their objective is to offload this property at a discount. There are hundreds of homes, with no occupants, waiting for the next owner to take a chance.

These properties are sold as is, with no obligation for any potential repairs, but for a handyman or a DIY queen, it’s a dream come true. These homes are popular with real estate investors who want to buy low, make the necessary repairs, and sell high. The buyer needs to be made well aware that they should have the property inspected before even considering putting in an offer, but they can look at the individual listing page to know what type of home they’re looking at.

  • “IN” stands for move-in ready, or insured.
  • “IE” stands for Insured Escrow, which means there’s $5,000 or less in required repairs.
  • “UI” is uninsured and you’re facing extensive repairs.

The next step is to show your buyer how to find an HUD-registered real estate broker. Next, they should learn about the bidding process, which is not a lot different than buying any other home. Help them find a properly vetted broker that has their best interests at heart. There are various loans available to HUD buyers, and possibly FHA financing for the needed repairs. HUD does not provide direct financing, but there are often shortcuts to other options.

HUD Homes are often frowned upon, but that doesn’t mean they’re not a worthy option for your buyer. You know who you’re working with, and you can gauge the situation to know whether or not this is a viable route for them. A potential buyer with no idea how to start the process will appreciate knowing all options available to them, and could earn you long term referrals in the process.