Pros and Cons of HUD Homes


  • HUD Homes often represent a good value and have less competition than a typical MLS listed property
  • HUD has a continuous supply of homes offered for sale and can be viewed online at HUD Home Store
  • Owner-occupants get a 15-day exclusive bidding period before investors are let into the auction
  • Earnest money deposit is only $1000
  • Each home has been inspected and its HUD Property Condition Report is publicly available
  • Daily bidding so you’ll know the next day if you’ve won or not
  • Homes are delivered vacant and cleaned
  • In certain instances, 50% discounts are available for firefighters, police officers, EMT personnel, and teachers
  • Unlike regular foreclosures, these homes can be toured
  • Cash buyers can close within 30 days
  • HUD will pay a portion of your closing costs


  • The bidding process is somewhat difficult and tedious – patience is required
  • The process is quick once your bid is accepted – contract and funds must be returned within two business days or your bid is canceled
  • Properties are sold “as is” with no warranties – although you have 15 days to complete an inspection
  • The sales contract is standardized with no “weasel out” clauses – your earnest money deposit is 100% at risk if you fail to close
  • Financing can be more difficult to get since some homes might need work to get them to insurable condition – special escrow loans are available to deal with this situation
  • Not all HUD Homes are a good value – Blackacre can help you assess the fair market value of each home after required repairs