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Indiana Home Buyers - 5 Essential Steps to the HUD Bidding Process

By Chanda Barrick

Real Estate Agent with Keller Williams Indy Metro Northeast

February 26, 2011 06:45 AM

Previously, I wrote a post about the process for bidding on a HUD property in the past;however, things changed in recent months. The general process remains the same, but there are differences that are important to note.

If you are an Indiana home buyer interested in purchasing a home from HUD, this brief tutorial will explain to you how the bidding process works.

HUD properties are listed both in the local BLC (MLS) and on the HUDHomestore website.

Previously a HUD home could only be opened by an agent that had a special key to enter the property. Now any agent can set up a showing via the same methods used for any other property currently on the market. If the probability is high that you will purchase a HUD property, it's also a good idea to verify whether or not the agent's office is a HUD approved broker. This is a requirement (Keller Williams Indy Metro West IS a HUD approved broker) if you'd like to place a bid on a property.

Once you find a home you are interested in, take a look at it in person, and decide to place a bid, the following steps will get you on your way to buying your home!

You'll need to inform your agent that you found a home you like and would like to proceed with submitting a bid for the property.
Provide your agent with a copy of your Driver's license and social security card as your legal name and social security number are required when submitting a bid. If you'll be purchasing the property with someone else, please provide a copy of their driver's license and social security card as well. If your name or SSN fail to match the information submitted with your bid, HUD will CANCEL your bid.
In addition to your Driver's license and Social Security number, you'll also need to let your agent know the purchase price, the amount (if any) you'd like to request for closing cost assistance (the HUD site will only allow your agent to enter up to 3% of the purchase price), and the type of financing you'll utilize to purchase the property (FHA 203(b), FHA 203(k), Conventional Loan, or Cash).
Your agent will then submit the bid on the HUDHomestore website.
Your agent will then let you know whether or not your bid has been accepted. Bid results are typically available to them by 1PM EST. Your bid will either be accepted, countered, or cancelled (rejected).

There is an owner occupant period (also includes non-profits and government agencies) for bidding which usually lasts approx 10 days although it does seem to vary a bit now with the new process. If no bids are submitted during that period, the bidding is opened up to everyone (i.e. investors) and bids are then reviewed on a daily basis.

If your offer is accepted, your agent will then collect your earnest money check and obtain signatures (from you) for the sales contract package that must be submitted to HUD within 48 hours of HUD's acceptance of your bid. HUD also requires that you close within 30 day (60 days if loan is 203(k)) of acceptance of your offer.

Once your offer is accepted and the actual paperwork is submitted, you'll then work through the rest of the purchase process including obtaining your financing, homeowner's insurance, and inspections. HUD homes are sold AS IS; therefore, if you find major issues with the home during inspection, you have the right to cancel your contract; HOWEVER, they will not make any repairs based on your inspection findings.

Please feel free to contact me with any questions you may have about the area or if you'd like me to send you the current active listings in the area. I look forward to hearing from you!