Articles, Information, Resources

A Department of Housing and Urban Development (HUD) home is a residential property acquired by HUD due to a foreclosure on an FHA-insured mortgage. HUD offers the property for sale in order to recover the loss on the foreclosure. HUD homes will need some level of repair. While anyone can buy a home for sale by the U.S. Government you must work with a real estate agent or broker who is authorized to sell HUD homes.

When you find a HUD home which you wish to acquire, your real estate broker submits a bid or an offer. There are offer periods in which HUD homes are normally sold, and at the end of this period all accepted offers are evalutated and the house is sold to the highest - within reason - bidder. Should occur that the home is not sold in the initial time, you can submit a bid before the home is sold, any day of the week will do, including holidays and weekends. After a bid is accepted, the real estate agent will be contacted in the next 2 days.

The VA (Department of Veteran's Affairs), when foreclosing on loans guaranteed or financed by the VA, acquires the properties in question. The purchase offer and sale contract forms should be prepared by a real estate agent, who will submit the offer through the broker who listed it for approval.

A Real Estate Owned (REO) or a bank owned property is one that returns to the bank after an unsuccessful foreclosure auction. Usually, the amount of money owed to the bank is higher than the equity in that property. The bank will usually try to sell the property at the higher possible price, and will most often counter your starting offer.

Be forewarned that bank foreclosures are not always a great deal. Some properties have liens against them. Some have people still living in them. Bank owned properties always sell in "as is" condition so your offer must include an inspection contingency period. This gives you an out in case the inspections bring to light problems that the bank won't pay to repair.

Always do your homework before making an offer. Check other homes in the area to see if they are comparable in price. Calculate the cost of renovation and never get caught up in a 'bidding war' because it can easily lead you to pay more than the market value. Have the property inspected and hold the bank accountable for any repairs before committing.