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Buying a Foreclosed Home

Foreclosed properties are a bargain, if you know what you are doing...don't make a costly mistake

It seems today that the buzz word in real estate is foreclosures. Purchasing a foreclosed property can be a great opportunity to get a great deal on a home or property.  Foreclosures represent a broad spectrum of prices, areas, size and types of properties. They are not just lower income properties, they are available in just about every price range and area.  They are usually either bank owned or HUD owned properties.

Foreclosures are generally most abundant in a down market, which makes it a great time to buy. Prices are generally less, and you usually can get the best deal at this time.  The housing market throughout history, has run in cycles, and history has shown that what goes up, will come down, and vice versa.   

During the 1980's, I sold a lot of foreclosed properties in and around the Houston and Fort Bend County area. At that time the market was very sluggish and really looked dim. I had many clients that did buy at that time and in the long run have done very well . They took a chance and it paid off for them.  

 If you are like me, you many not be a person that is a big risk taker, but in my opinion buying a home, if you do your homework, is generally not a great risk, even in a down market. When you buy a home or property, unlike the stock market, you have a tangible asset, and even if the market goes down, you still have the home or property. According to the National Association of Realtors, statistics have shown that in most areas, properties increase in value over time.

 Understanding Terms of Foreclosed Properties

Buying bank owned properties

When a homeowner stops making payments on their mortgage the bank that is holding the mortgage will foreclose on the property. The bank will then put it on the market for sale. They will generally sell it at a reduced price for a quick sale, because they usually want to get rid of it as soon as they can.

What is a HUD Owned Properties?

HUD stands for Housing and Urban Development, and is owned and controlled by the US Goverment. When someone that has gotten a FHA loan and it is foreclosed on, it becomes the property of HUD, and  it is sold through HUD.  They are generally priced for a quick sale. HUD homes are sold by sealed bid on line thorough a HUD approved real estate broker.  

Who can buy a HUD home?

Anyone! If you have the cash or can qualify for a mortgage you can buy a HUD home. Priority is first given to owner occupants and then if it is not bought by a owner occupant then they will make it available to investors.

 To purchase a HUD home, a buyer must be pre-approved and must make an offer through a certified HUD approved broker.

Is it a bargain?
It’s commonly assumed that any foreclosed property must be a bargain and an opportunity for easy money. You have to be very careful about buying a foreclosed home if your intent is to make money off of it.  While it’s true that the bank and HUD are typically anxious to sell it quickly, they are also strongly motivated to get as much as they can for it.  When considering the value of a foreclosure, you need to look closely at comparable sales in the neighborhood and be sure to take into account the time and cost of any repairs or remodeling needed to prepare the house for resale.  The bargains with money making potential exist, and many people do very well buying foreclosures.  But there are also many foreclosures that are not good buys and not likely to turn a profit. 

If you are interested in learning more about buying a foreclosed home, I will be teaching a class on the complete home buying process focussing in on foreclosures. I have had a lot of experience selling and buying foreclosures, so I believe I can give you some very good guidance and insight on the complete process. If you would like to come please sign up. 

We also offer a free service that will automatically send you forceclosures as soon as they hit the market, giving you a jump on the competition along with providing comparable sales of like properties in the area of your choice.