How to bid on a HUD Foreclosure:

While there are some actual courthouse step foreclosures by the Department of Housing and Urban Development, usually when someone uses the term “HUD Foreclosures” they are referring to properties that were previously financed with an FHA insured mortgage. Where the lender has already foreclosed on the property and decided to turn the property over to HUD (instead of selling it as a Bank REO Property) in exchange for compensation via the FHA mortgage insurance.

Bidding on a HUD foreclosure is completely different than bidding on a property at the courthouse steps.

The actual foreclosure has already taken place so you will probably be closing at a title company (or equivalent thereof), usually with a clear title and title insurance.

Most of these properties will be sold via an online auction.

Basic Timetable

New properties are listed each Friday.

Days 1-5

(Friday through Tuesday) - Owner Occupant Only - Simultaneous Open:
Owner occupant bids are accepted. All bids are opened at the same time at the end of the five-day period. If none of these bids are acceptable to HUD, there will be five more days of owner occupant only bidding.

Days 6-10

(Wednesday through Sunday) Owner Occupant Only - Daily:
As stated above, still reserved for owner occupant but the bids will be opened each night.

Starting Day 11

(Monday) All Bidders - Daily:
If no owner occupant bids are accepted, Investors can now bid. The bids will be opened each night.

An observation from previous experience: HUD does not appear to always update the web-site first thing Monday morning to account for owner occupant accepted bids.

You may see a property that is still shown as available Monday morning and listed for all bidders. Only to find out later in the day (when they update the web-site) that it was sold to an owner occupant. This can be very aggravating if you just spend the whole morning looking at the property with your agent/broker.

You will need to bid through a real estate broker that is registered with HUD. A high percentage of the brokers in the marketplace are registered with HUD, so you should have no problem finding one.

Warning:
If you are an investor, do not bid as an owner occupant. The penalty for falsifying that you are an owner occupant when you are actually an investor can be fines up to $250,000 and up to 2 years in prison.

Check with your broker and review the HUD web-site for the most up-to-date rules and bidding directions.