How does HUD determine the winning bid for HUD Real Estate Owned (REO) Properties sold during competitive sales periods?

For Properties sold in competitive sales, HUD will accept the bid that produces the greatest net return to HUD and meets all the terms and conditions pertaining to HUD’s offering, with priority given to Owner-Occupant Buyers for Properties being offered with insured Mortgages.
For Properties marketed as uninsurable, HUD will give priority to Governmental Entities and HUD-approved Nonprofits before Owner-Occupant Buyers.
The net return is calculated by subtracting the dollar amounts for financing and closing costs, as stated on Line 5 of form HUD-9548, Sales Contract, and real estate sales commissions to be paid by HUD, from the bid price.
Where two or more bids result in identical net offers, HUD will give preference to the Owner-Occupant Buyer.
If the identical bids were submitted by two or more Owner-Occupant Buyers, or by two or more Investor Buyers, HUD will choose the winning bid by lottery.
If all bids received are unacceptable, HUD may, at its discretion, offer counteroffers to one or more bidders, and those bidders may resubmit bids during a specified period of time.
If HUD elects to counteroffer, HUD will accept the highest acceptable net bid received within the specified time period.
For additional information please contact the Asset Manager with jurisdiction over the property.  To locate contact information for the Asset Manager please visit the HUD Homestore website at and click “Help” in the gray tool bar.
For policy information see Handbook 4000.1 IV.B.2.h. at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-03668