Purchasing HUD Foreclosed Properties
Department of Housing and Urban Development or HUD foreclosures are available throughout the U.S. The process in purchasing HUD foreclosures is a little bit different than buying a home from an individual, so you should do some research before you go shopping for HUD foreclosures.
The FHA - Federal Housing Administration is a part of HUD, it's the part that provides federal mortgage insurance. If HUD foreclosures are purchased with a loan insured by the FHA, then the lender can file a claim for the balance due on the mortgage. The FHA will pay the lender's claim and then transfer the ownership of the property to HUD, which in turn will sell the home. HUD foreclosures are appraised priced at a fair market value but if the property needs repairs the price will be adjusted downwards to reflect the investment the new owner must make in order to improve it. The new owner will be responsible for all repairs and improvements.
If you are interested, you can view listings of HUD foreclosures on the Internet. Each state will have differently set up websites so take some time to browse them thoroughly.
All HUD foreclosures are sold using a bidding process. There's an Offer Period, during which sealed bids are accepted from one's agent. When the Offer Period ends, all the offers are opened and the HUD will usually accept the highest bid.
Home inspections are recommended for any type of home purchase. So you should inspect HUD foreclosures before you make the offer to purchase. This will help you determine a bidding price, especially if repairs are required
If HUD foreclosures are not sold within six months, the HUD will sell them for $1 each to approved nonprofit organizations and government agencies. Homes must then be used in order to create housing for families in need or to benefit neighborhoods.