They are different than other REO homes in the way they are marketed and sold. HUD homes are not just looking to get rid of their properties, but first off are looking to help provide affordable housing for first time buyers. When a HUD home is first listed, it is only available to buyers looking for a primary residence. For this reason, HUD homes are hard to use as investment properties not designed for primary use.
If the HUD House doesn't sell to someone looking for a primary residence, then the bidding is open for real estate investors. At this point, the property is usually not a deal. If it were, it would have sold during the initial listing period.