When bidding on a home owned by the U.S. Department of Housing and Urban Development, known as a HUD house, there technically is no bid floor. You can, in theory, bid as low as you like. In reality, however, your bid will need to compete with others. HUD is most likely to accept a bid that covers at least 85 to 88 percent of their costs. They may accept a lower bid if necessary, but the agency will hold a property for up to six months. If no acceptable bids have been received in that time frame, HUD may sell the house to another government agency for $1 so that it can provide low-income housing for a family or otherwise benefit the community.
HUD House Basics
HUD isn't in the business of selling houses. Instead, HUD houses are ones that the agency gets stuck with. To make home ownership more attainable, the federal government guarantees mortgages for some buyers. This guarantee is a promise to pay the mortgage lender if the home buyer doesn't. If a buyer defaults on a mortgage, HUD pays the lender and takes possession of the home. HUD then sells the home to the highest bidder in an effort to recoup their costs.
In order to sell them quickly, HUD lists their
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The longer the home has been on the market, the more likely they are to accept a low offer. Supply and demand also matter. HUD homes may command lower prices when the market is flooded with them and deals are easy to come by. Sometimes, though, it's in your best interest to bid as much as you reasonably and comfortably can on a home. In San Francisco for example, the housing market is notoriously expensive. The area is known for sky-high housing prices and, early in 2018, Bay Area home prices hit a new record high with a median price of $820,000. Given the demand for affordable housing in the area, HUD homes can easily sell for far more than their asking price and still look like bargains compared to other houses in the