A Visual Guide to Finding HUD Home Foreclosures

In our first installment of buying HUD homes series, we listed some common myths about buying a HUD home. In this second installment, we’ll walk through the basics of the HUD website and an overview of the information available online for HUD homes.

A little background, Most of it accurate

HUD is the Department of Housing and Urban Development (They were originally known as “DHUD” but they all got together and thought “HUD” sounded a lot cooler). It administers the FHA mortgage loan insurance program. As part of that function, it buys properties from private banks after foreclosure for the FHA insured amount of the mortgage loan. HUD homes consist of 1 to 4 unit residential properties.

After HUD takes ownership of a foreclosed home, it offers the home for re-sale. Private management companies, under contract with HUD, manage the sales of HUD homes, including listing the properties with a real estate broker, conducting inspections, and providing a website portal for listing and selling the properties. Because different management companies are awarded contracts to manage different regions (such as one or more states), the information available through listing websites, the bidding process, and even pricing of the homes differ to some degree between companies and therefore from region to region.

Navigating the HUD Site

We’ll start with the HUD Homes main page. This page (shown below) has links to all fifty states, the District of Columbia, and U.S. Territories (just in case you’re looking at property in the Virgin Islands):

Clicking on any state first will take you to a HUD page notifying you that you are about to leave the HUD website with a further link to that state’s property listing website, so you’ll need to click through to the external site for the state you’ve chosen. Selecting Virginia as an example, here is what the page looks like:

To reach the HUD Home listings in Virginia, click the link provided: http://www.tenmanagement.com/listings/state.do?code=VA. Although the layouts of the external listing sites differ, the sites provide generally the same information and search functions. The Virginia website provides three different search categories: Public, Hurricane Evacuees and Dollar Homes (no, unfortunately you can’t buy them for a dollar). Here is what the page looks like:

For our purposes, we are interested in the Public category. As you can see, properties can be searched by various criteria, such as location, price range, or properties with price reductions, or you can choose to list all available HUD Homes in Virginia if you prefer. Clicking on the price reduced properties link produces a list of price reduced homes that can be sorted by HUD case number, city, list price, list date, or bid open date. Click here to see what the list looks like.

Information on Specific HUD Homes

Clicking on an image of the home will cause a detail screen for that property to display, which includes a map, the number of bathrooms and bedrooms, the list price and date, a picture of the home, the square footage, year built, and notes concerning the condition of the property. Here is one listing taken from the Virginia website: (clicking on the image will enlarge it–or register you for various magazine subscriptions. We can’t remember how we set this one up.)

As you can see, this particular property is a peach. Apart from the picture, take a look at the notes section. Fun issues like the presence of “deteriorated lead based paint” and “cracks in the foundation”, among others, await you for this potential purchase. Also note the Property Condition Report link under the “Related Documents” section. The Property Condition Report contains further details about the property from the HUD inspection, including a list of deficiencies with HVAC, plumbing and electrical systems.The property-specific information available through the HUD website can really save some time in narrowing the list of potential real estate investments. However, it’s best used as a screening tool. In our experience, the Property Condition Report often contains some inaccuracies, and the thoroughness of the inspection seems to vary from region to region. It should never replace your in-person inspection of the property nor be relied upon as substitute for a professional home inspector.

In the next installment on our series on buying a HUD home, we’ll be looking at the bidding process and some tips on determining a bid that’s likely to be accepted. In the meantime, feel free to add the above property to your portfolio. Here’s one of the inside pictures from the Property Condition Report: (clicking on the image is likely to avoid buyer’s remorse).

We’ll be taking a pass on this one.

Tagged as: foreclosure, HUD homes, real estate investing