“Foreclosure” covers three different purchases. Which one you are in decides who you negotiate with, how long it takes, and whether a first-time buyer has a real shot.
The three, in one table
| HUD home | Bank-owned (REO) | Short sale | |
|---|---|---|---|
| Who owns it | The U.S. government, after an FHA loan foreclosed | A bank or servicer after any loan foreclosed | The homeowner, who owes more than it is worth |
| Who decides | An asset manager applying published rules | The bank’s REO department, case by case | The owner accepts, then the lender approves |
| How you offer | Sealed bid on HUDHomeStore through a registered broker | Normal Colorado contract, often with bank addenda | Normal contract, then wait for lender approval |
| Owner-occupant priority | Yes, a written exclusive period | Sometimes (Fannie Mae and Freddie Mac REO have First Look periods) | No |
| Deposit | $500 or $1,000, fixed | Negotiable, often 1% | Negotiable |
| Inspection contingency | None; inspect, but cancelling costs part of the deposit | Usually yes, short | Usually yes |
| Repairs by seller | Never | Rarely | Almost never |
| Time to close | 30 or 45 days, hard deadline | 30 to 45 days, negotiable | 60 to 180 days waiting on the lender |
| Seller pays closing costs | Up to 3% if you ask in the bid | Negotiable | Rarely; lender limits |
| Deed | Special warranty | Special warranty | General warranty |
What that means for a first-time buyer
A HUD home is the only one of the three with a month reserved for you and a formula that does not care whether the other bidder is cash. It is also the least forgiving on deadlines. A bank-owned home is a normal negotiation with a slow, unemotional seller. A short sale is a normal negotiation with an emotional seller and a slow, unemotional lender behind them.
What that means for an investor
Investors do best on bank-owned homes and on HUD homes after the exclusive period. Short sales are where investors lose months to a lender that ends up rejecting the price. When investors can bid on HUD homes.
Agents
Any licensed agent can write on a bank-owned home or a short sale. A HUD bid must be placed by a broker with a HUD NAID registration. The Kenna Real Estate Group is registered; most brokerages are not. Find a registered agent.
A plain-English example
A buyer in Aurora had two options at $360,000: a HUD home listed IN, and a bank-owned home two streets over. Both needed carpet and paint. On the HUD home she had 15 days with no investor competition and HUD paid $10,800 of her closing costs. On the REO an investor offered cash above list on day 2. She bought the HUD home. HUD versus auction is a different comparison.
Not sure which rule applies to the house you are looking at? Call or text 303-955-4220. A live person answers, and the answer is free.
Written and reviewed by
Brian Lee Burke, Colorado HUD home specialist and team leader
Licensed Colorado real estate professional since 2002 · REALTOR® · Team leader and licensed broker of the Kenna Real Estate Group at Keller Williams DTC, a HUD-registered group that regularly bids on HUD homes · Author of The Real Estate Playbook and Mastering Real Estate. Brian’s full HUD biography.
Last reviewed: September 29, 2026 · Sources: HUD Home Store (hudhomestore.gov) and HUD program guidance, HUD Handbook 4000.1, REcolorado MLS data via kennarealestate.com, and the Kenna Real Estate Group’s own HUD transaction files.
Contact: call or text 303-955-4220 or homes@kennarealestate.com. During office hours you reach a live local Kenna real estate professional, not a robot or a national call center. Brokerage: Kenna Real Estate Group at Keller Williams Realty DTC, LLC, 6300 S Syracuse Way, Suite 150, Centennial, CO 80111. Each Keller Williams office is independently owned and operated. The Kenna Real Estate Group is an independent real estate team and is not affiliated with or endorsed by HUD or any government agency; official property information comes from HUD Home Store. Equal Housing Opportunity.
Free guide, PDF
The Colorado HUD Home Buyer's Playbook
How HUD bidding really works, the nine ways buyers lose, and the bid worksheet. 18 pages, free.
Why you want it before you bid:
- The 15-day owner-occupant window, day by day, so you never miss a deadline
- The net-to-HUD math HUD actually scores, with a one-page bid worksheet
- The nine ways buyers lose a HUD home, and how each one is avoided
Find every home available, not just HUD homes
Advanced home search: every listing on the Colorado MLS, with the full filters, on kennarealestate.com.
Opens kennarealestate.com, the Kenna Real Estate Group’s full MLS search. HUD homes only? Use the tiles and the map on this site.
Ask us about HUD homes
Tell us what you are working with and we will tell you honestly whether a HUD home is the way to get there. No cost, no obligation, and nobody sells you anything.
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