The short answer
How to write an offer on a HUD home: you don't use your state contract. A HUD-registered broker submits a sealed bid on HUDHomeStore.gov under a NAID number. HUD picks the bid that nets it the most after commission and closing cost help. If HUD accepts, you have about two business days to deliver the signed package and earnest money.
Below: the nine steps, a net-to-HUD table, the 48-hour package list and the questions buyers ask most.
Step by step: how to write an offer on a HUD home
- Be registered first. You need a NAID number before you can bid, and a new one can take weeks. Read how to register as a HUD selling broker before a buyer calls.
- Read the listing. Four things: the financing code (IN, IE or UI), the bid period, the bid-open date and any "$100 down" flag. The code tells you which loans can close. See HUD financing codes.
- Match the loan to the code. Get a real pre-approval letter that names the loan type. Standard FHA on a UI home will fail.
- Inspect before the bid. There's no inspection contingency after acceptance. Request utilities, get in with an inspector and price the work. See HUD as-is inspections.
- Set the ceiling. Comparable sales in this condition, minus repairs, minus a cushion for surprises. That's the most your buyer should bid.
- Decide on closing cost help. HUD will pay up to a set percentage of closing costs if you ask. Asking lowers your net. On a fresh listing with competition, it can cost you the house. On a home that's sat 30 days, ask.
- Enter the bid. Bidder type, price, closing cost help, commission, buyer names exactly as on ID, pre-approval attached. Submit before the daily deadline shown on HUDHomeStore. Screenshot the confirmation.
- Check the result. Results usually post the next business day. Accepted means move fast. Counter means HUD told you its number. Other statuses mean backup or out. See HUD bid rejected and backup offers.
- Deliver the package. HUD sales contract (form HUD-9548) and every addendum on the listing, signed. Earnest money to the closing agent on time. Late gets cancelled.
HUD offer vs a normal offer
| Normal resale offer | HUD home offer | |
|---|---|---|
| Contract | Your state-approved contract | HUD's sales contract and addenda from the listing |
| How it's sent | To the listing agent | Sealed bid on HUDHomeStore.gov |
| Who can submit | Any licensed agent | A broker with a HUD NAID number |
| What wins | Price, terms, story | Highest acceptable net to HUD |
| Inspection | Usually a contingency | Before you bid; sold as-is |
| Back-and-forth | Counters both ways | Accept, counter at HUD's number, or not |
| Paperwork window | Set by the contract | About two business days after acceptance |
The net-to-HUD math (illustration only)
Same price, two different nets on a home listed at $350,000:
| Buyer A | Buyer B | |
|---|---|---|
| Bid price | $350,000 | $350,000 |
| Closing cost help asked | 3% ($10,500) | $0 |
| Selling commission | 3% ($10,500) | 3% ($10,500) |
| Net to HUD | $329,000 | $339,500 |
Buyer B wins by $10,500 at the identical price. Buyer A could have kept the help and bid $360,500 instead. On a financed purchase that can be smarter, because the extra price is financed and closing costs are cash.
Illustration only. A lender sets the real loan terms. HUD's percentages, fees and forms change, and the current listing, contract and addenda control. This is not an offer of credit. Check current rules at HUDHomeStore.gov.
What the buyer gives you before you touch the site
- Full legal name of every purchaser, exactly as it will appear on title
- A Social Security or tax ID number for each purchaser (HUD asks for it on the bid)
- Current mailing address, phone and email
- A written pre-approval letter, or proof of funds for cash
- Owner-occupant or investor. An owner-occupant signs HUD's certification and must live there 12 months. See owner-occupant vs investor bid periods.
If you log in and there's no Place Bid button, your agent account isn't linked to your brokerage's NAID. Fix the link with your broker. Don't create a second account.
How long does it take to hear back on a HUD bid?
Usually the next business day after bids are opened. During the first part of an insured home's owner-occupant window, bids are held and opened together at the end of that period. After that, HUD reviews bids daily. Check the status in your HUDHomeStore account every morning and call your buyer the minute it changes.
Can you negotiate the price on a HUD home?
Not the way you do on a resale. You get one sealed number. If you lose, HUD may counter you at the net it will take. You can accept that counter or walk. In our experience, the best "negotiation" on a HUD home is a smarter first bid and the choice of whether to ask for closing cost help.
The 48-hour package, item by item
From the acceptance notice you have about two business days to get the executed package to the asset manager named on the listing. Miss it and the bid is cancelled and goes to the next bidder.
- HUD-9548 sales contract, signed by every purchaser and the broker
- Owner-occupant certification (owner-occupants only)
- Lead-based paint addendum if built before 1978
- The other notices and addenda linked on the listing
- Earnest money as certified funds, payable exactly as the asset manager instructs. HUD's rule sets $500 for homes at $50,000 or less; above that, the amount is set by HUD within a range. Confirm it on the listing.
- The pre-approval or proof of funds, plus each purchaser's ID
Use the closing date the asset manager gives you. Nothing is under contract until the asset manager signs and returns the contract. Need more time later? Request an extension on HUD's form before the deadline. Log it the same day. More in HUD earnest money and closing timeline.
How to explain it to your client
"A HUD home isn't like a normal house. There's no back-and-forth. We get one shot, sealed, on HUD's schedule. HUD doesn't pick the biggest price. It picks the bid that leaves HUD the most after my commission and any closing cost help you ask for. So we inspect first, we figure out your top number, and then we decide if asking for help is worth it on this house. If we win, we have two days to sign and get your earnest money in."
Watch-outs
- Pre-qualification isn't enough. Attach a real pre-approval on financed bids.
- Owner-occupant means it. It's a federal certification. Never let an investor bid as an owner-occupant.
- The two-year rule. A buyer who bought a HUD home as an owner-occupant recently may not be able to bid as one again. Check the current rule.
- Names must match. Every purchaser exactly as on ID. Typos get bids rejected.
- Earnest money deadline. Strict. Have certified funds ready before the bid.
- HUD's contract, not yours. Don't attach your state purchase contract. Ask your managing broker about any local addenda.
Keep going
- All HUD, VA and FHA pages: HUD, VA and FHA training
- Next: the HUD $100 down incentive, HUD financing codes IN, IE and UI, HUD bid periods for owner-occupants and investors, what to do when a HUD bid is rejected
- Free for your buyers: the HUD Homes $100-Down Guide walks owner-occupants through the $100-down program step by step.
Extra detail
- It's a dollar figure, not a percent. The closing cost request is written on the bid as dollars, up to HUD's cap (currently described as 3% of price; check the listing).
- Unused help goes back to HUD. Anything requested but not used at closing stays with HUD, so ask for the lender's estimate, not the max. Over-asking lowered the net for nothing.
- Allowable costs only. Lender fees, title/settlement, prepaid interest, recording and similar. Never the down payment.
- Fits inside FHA's seller-contribution limit. HUD's cap sits within FHA's interested-party contribution limit, so it doesn't conflict with FHA. Check the current FHA limit in Handbook 4000.1.
- Run the net three ways. model no help, half help and full help against the As-Is value, then pick the mix that wins at the lowest total cash.
- Repair escrow is not a concession. On IE homes the repair escrow is part of the loan and doesn't affect HUD's net; only price, closing cost help and broker compensation do.
- Cash bids. A cash buyer can ask for closing cost help too, but lowering the price by the same amount gives HUD the same net with simpler paperwork.
This is training for real estate agents. It isn't legal, tax or lending advice. HUD's rules control. Check with your managing broker.
Questions
Can a buyer bid on a HUD home without an agent?
No. Every bid goes through a HUD-registered broker with a NAID number.
Does bidding on day 1 beat bidding on day 9?
Not during the first part of an insured home's owner-occupant window. Bids are held and opened together. After that, HUD reviews bids daily.
How much earnest money does a HUD home need?
HUD's rule sets $500 for homes at $50,000 or less. Above that, HUD sets an amount within a range. The listing tells you the exact figure.
Who pays the buyer's agent?
HUD pays the selling broker out of the sale, up to the percentage on the listing. You enter it in the bid.
Can HUD counter my bid?
Yes. HUD often counters bidders at the net it will accept. Decide fast.
Do I need a pre-approval to bid?
On a financed purchase, yes. Attach a real pre-approval that names a loan type the financing code allows.
Where are the forms?
Linked on each listing at HUDHomeStore.gov, plus HUD's home-buying pages on HUD.gov.
Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.