You do not write a check to your agent on a HUD home. HUD pays the buyer’s broker from the proceeds of the sale, up to 3% of the price, if your agent puts it on the bid. It is one of the two numbers that turn your price into HUD’s net, and understanding it is understanding how HUD picks a winner.
The formula
Net to HUD = your price minus the closing costs you asked HUD to pay minus the commission on the bid.
HUD accepts the highest net during the initial bid period, and any bid over its threshold after that. Two bids at the same price with different commissions are not tied.
A worked example
| Bid A | Bid B | |
|---|---|---|
| Price | $350,000 | $346,000 |
| Closing costs from HUD | 3% = $10,500 | 0 |
| Commission on bid | 3% = $10,500 | 2.5% = $8,650 |
| Net to HUD | $329,000 | $337,350 |
Bid B wins by $8,350 despite a lower price. The buyer in Bid B brings more cash to closing and pays the agent’s remaining half percent, if any, themselves. Neither is wrong; they are different trades.
What changed in 2024
After the national commission settlement, buyers sign a written agreement with their agent that states the agent’s fee before touring. On a HUD home that fee can still be paid by HUD from the proceeds, up to 3%, as long as the bid requests it. If your agreement says 3% and the bid asks HUD for 2%, you owe the difference at closing. Read your agreement and your bid together.
Why we tell you all of this
- You can lower the commission on a bid to raise your net. Ask. Some agents will, some will not, and the answer should be in writing.
- You should never assume “the seller pays” means “it costs nothing.” It costs net, and net is what wins.
- On a home that has sat 60 days, net matters less than closing at all, and a full-commission bid at an acceptable net is fine.
The listing side
HUD’s listing broker is paid separately by HUD under its contract and is not on your bid. You are only choosing your own agent’s number.
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 16, 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
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