Finance Articles

The Department of Housing and Urban Development (HUD) acquires homes which have suffered foreclosure under an FHA-insured mortgage and offers them for sale. Their objective is to offer these "as is" homes in an attempt to recover the loss incured due to the foreclosure. They will probably need some repair work. Although a HUD-authorized real estate agent or broker is required to sell these homes, anyone may buy them.

In the sale of a HUD home, there is a specified period within which offers are accepted. At the end of this period, the sale is granted to the person with the highest reasonable offer. If the home is not sold within this period, offers will be accepted until a bid is accepted. If you wish to bid on a HUD home, your real estate broker should submit the bid for you. If your bid is accepted, your real estate agent will be notified within 48 hours of its acceptance.

The Department of Veterans' Affairs (VA) buys properties from foreclosures of loans they guarantee or finance. For such homes, please have your real estate agent complete the Offer to Purchase And Contract of Sale VA form, which should be submitted for approval with your offer, through the listing broker.

After a bank fails at auctioning a bank owned or Real Estate Owned (REO) home, it will try other means to get the best price possible for the property. It is unlikely that they will recover their losses in the property, as what is owed to the bank is usually greater than the property equity. They will typically not accept your first offer, but will counter it with a higher price.

Keep in mind that bank foreclosures are not always a bargain. There may be liens against the property and there may be someone still living in the property. Banks always sell a property in "as is" condition so your offer should include an inspection contingency period in case the inspections reveal problems that the bank won't 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.