What If My Bid Is Accepted on a HUD Property?

by Denise Sullivan

The U.S. Department of Housing and Urban Development, or HUD, forecloses on Federal Housing Administration-financed properties and resells them to the highest bidder on its Homesource website. You may submit bids on multiple properties, but HUD will only accept the bid that gives it the best return. Your bids on all other properties will be canceled upon acceptance of any single bid. You may cancel your bid at any time before its acceptance. After acceptance, you may only cancel the transaction by failing to execute the initial contract in time. Failing to complete any other steps in the process will cause you to forfeit your earnest money deposit.

Closing Costs

HUD pays the closing costs up to 3 percent of the home's purchase price, including the selling agent's commission. Mortgage origination fees are capped at 1 percent of the purchase price. Closing costs are subtracted from the bid amount when HUD is evaluating competing bids.

Time Frame

HUD closings take longer than a standard home purchase, so make your bids early if you need to move out of your current home quickly. The winning bid will be listed on HUD's Homesource website. HUD will also send written notification if your bid is accepted. You must sign the contract and deliver it to the HUD asset manager responsible for the property. Include your earnest money deposit in the form of a cashier's check or money order. If you are financing your purchase, you must close escrow within 45 days of the bid's acceptance. Cash buyers only have 20 days to close escrow.


You have 15 days after the bid is accepted to conduct an inspection of the property. These homes are sold "as is" with no guarantee of zoning or building code compliance. HUD will only repair major safety problems. You may cancel the sales contract and receive a refund of your deposit if the condition of the property is worse than was indicated in the property condition report on HUD's website. Before you can cancel, you must present an inspection report to HUD showing the undisclosed defects.


HUD does not provide any financing to homebuyers. You are required to obtain financing approval or a prequalification letter from a lender before placing your bid. If your bid was higher than the FHA-appraised value, you must pay the overage in cash. You may be able to qualify for financing over the purchase price with a 203(k) rehabilitation loan, which combines the home purchase and the costs to renovate the property into one mortgage.


About the Author

Denise Sullivan has been writing professionally for more than five years after a long career in business. She has been published on Yahoo! Voices and other publications. Her areas of expertise are business, law, gaming, home renovations, gardening, sports and exercise.

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