Home buyers these days have many options for purchasing a home even if they are not financially well off. This is especially good news for those clients who may not qualify for a conventional loan because of their income level or low credit scores. For these buyers, the government offers affordable homes through the Federal Housing Administration in cooperation with the Department of Housing and Urban Development.

As a real estate broker, you are likely to have some clients who are interested in HUD homes since they are often inexpensive and can be a real bargain. Therefore, it’s a good idea for you to learn about this program because the process for purchasing a HUD home can be complex, and those brokers working with HUD buyers must be registered with the agency.

What is a HUD home?

You will not have access to HUD listings on the Multiple Listing Service. Instead, they are posted on HUD’s website. HUD homes are typically foreclosures that the FHA has seized and is reselling to recoup its losses. For this reason, HUD homes are sold as-is with no repairs or upgrades.

While the government appraises them to price them fairly, it is possible that a property your client is interested in buying could need some repairs. You will want to encourage them to seek professional inspections and advise them when repairs may be more than they can handle.

How can my client buy a HUD home?

Your clients should obtain pre-approval for financing just as with a conventional sale. You can direct your clients to special programs that assist buyers with closing costs, home repairs and other homebuying expenses. Those who intend to purchase a HUD property as a primary residence receive first priority, but a property that does not sell during this exclusive sales period is open to investors.

Additionally, any home that remains unsold for longer than 180 days becomes a $1 Home, meaning HUD offers it for sale for $1 in addition to closing costs. This can be a dream come true for home buyers, but $1 homes typically have a low market value to begin with.

What is my role?

HUD properties come with complicated purchase requirements and sometimes carry risks for your clients. If you are interested in working with HUD properties, you will need to obtain the appropriate credentials and learn how to guide your clients through the maze of government regulations. In the end, you may play an important role in bringing home ownership to clients who might otherwise be ineligible.