A HUD home is when a government-insured loan (FHA) gets foreclosed and the Federal Housing and Urban Development pays the defaulted loan off, and then puts the home on the market.
Many people are interested in buying HUD owned houses because of a possible low market value of the home. HUD does list the homes for a reasonable value, however, some great deals are available depending on the home and the price negotiated between the buyer and the listing HUD agency.
To purchase a HUD owned home you must work with a HUD registered real estate broker that can put in a bid on a home for you.
HUD owned homes are sold as is with no warranty of any type. So it is up to you to get the home inspected in order to identify any potential or existing problems with the home.