HUD homes for sale are FHA insured loans that have been foreclosed and HUD has taken possession of the HUD houses.

HUD assigns the HUD house to a Management and Marketing Contractor. The M&M contractor has cleaned it up the HUD house and had it appraised by a FHA appraiser.

The rules for buying HUD homes for sale are different for home buyers (HUD calls them Owner-Occupants) and investors. This article is written for home buyers, not investors, and I will discus the things they should know before making a bid on a HUD house.

1. Who can buy a HUD home for sale? Almost any one can buy HUD homes for sale along as you can get a mortgage or have cash. There are no restrictions on who can buy HUD houses.

2. Loan pre-approval. You will need a pre-qualification letter from a lender or proof of cash funds in the amount greater than the property that you are buying. HUD will not do a HUD home loan to purchase a HUD home for sale. It is your responsibility to make your own financing arrangements.

3. HUD houses for sale are sold in 'AS-IS' condition. All HUD home listings are sold in 'As-Is' condition and HUD will not do any repairs. They do provide a Property Condition Report on some HUD home listings but no all. The Property Condition Report is similar to a home inspection. The problem with buying a HUD home listing is you cannot do a full inspection before you make a bid. You have to have a signed accepted contract from HUD before you can have the utilities turn on. You can have an inspection done after you have an accepted contract.

4. Earnest money. The earnest money requirements are $1,000 if the list price of the HUD home listing is over $50,000 and $500 if the list price is under $50,000. It has to be in the form of a cashier check, official bank check, or money order. The return of the earnest money is not automatic if you decide you don't want the HUD home listing.

5. Real estate agent. To make bids on HUD homes for sale you have to use a real estate agent. The bidding process is done on the internet by an approved real estate agent. You need to locate an experienced real estate agent in buying HUD houses. An inexperienced agent will cost you thousands of dollars in mistakes.

Purchasing HUD Homes for sale is a lot different than buying a house from a seller-owner. Even before you make a bid on a HUD house you have to do the necessary research and learn the opportunities and pitfalls of buying a HUD home for sale.