In June of 2008, foreclosure filings were up an average of 50% in most American states.  You can take this news in many ways.  But for the real estate investor, this is great news.  There are now more choices than ever to not only make a profit, but to help become your own boss and be in charge of your financial future.  However, don’t be tempted by the vast array of HUD foreclosure homes that are on the market.You still need to look at each HUD foreclosure home with a cool head before deciding on making a bid.

Do Your Research

Remember, HUD foreclosure homes are sold as-is, even if there are corpses and craters inside of it. Never contemplate bidding on a HUD foreclosure home sight unseen.You must inspect it yourself.  You also need to keep in mind that if people are going to be living in the property right up until the sheriff kicks them off, they will leave damage in their anger that you will be responsible to fix.

Although HUD foreclosure homes often come with commission fees paid by Housing and Urban Development, they don’t often pay the back taxes or any other fees that the previous owner couldn’t pay for.  You need to get the HUD broker to check up on the physical and financial condition of the house.

Finding The Property

A HUD foreclosure listing is a matter of public knowledge, much in the same way marriages and divorces are.  You need to check out your state’s HUD’s web site in order to keep tabs on which foreclosed houses they are planning on buying.  Don’t expect them ever to get a property in a hard-to-get-into neighborhood, or a home that’s worth more than $400,000.

You then need to contact the broker or company that is working with HUD to sell the property.This is the person or business that you will be getting to know very well in your pursuit of the HUD foreclosure home.  If a HUD employee offers to work with you as a real estate broker to help you buy the home, bolt.This is illegal. 

What Am I Bid?

For the first ten days that the HUD foreclosure home is on the market, only people wishing to live in the home are allowed to bid.  If you are a real estate investor, you will have to wait.  Odds are that your HUD foreclosure home will still be there waiting for you.  You then bid electronically with your HUD-approved broker.  You’ll know in a few days if the bid was accepted by HUD.

Go here for more about Foreclosure Prevention and Stop Foreclosure

What is a bank foreclosure?  Unless you have been hiding under a rock you already, know that the housing market in the United States has been falling in value, which is caused partly by the number of homes that are facing foreclosure.In many situation The borrowers of these loans for whatever reason failed to make their monthly payments as they had agreed to.  In turn, the bank, which held the mortgage on the home, was forced to take back the property in the hopes of selling it and getting out of the debt.This is precisely what a bank foreclosure is.It is a home that is owned by a bank that held a mortgage on a home in which the owner did not keep up with their monthly payments.

These homes are now on the market and being sold. There are many misconceptions about these homes and often people do not realize that they make a great investment.Here are three things you need to be aware of regarding these foreclosures.

1: Bank’s Sell For Less, Often

One of the key benefits of buying foreclosure homes is that the bank is often willing to sell the home fast even at a discounted price.Their business is not owning these homes and therefore they need and want to sell.Frequently, bank foreclosure homes will be sold below their appraised value.  What this means to the average lender is that the property is quite profitable to them.

2: Bank Owned Homes Aren’t A Mess

Many people feel that bank foreclosure properties are properties that are run down and beaten up.  In fact, they are homes just like any other you would walk into in the hopes of buying them.  The good news is that these bank owned properties are often in good condition.  Many offer a range of opportunity for low cost, without a lot of repair.With that said, you should realize that it is still necessary to invest in appraisals and home inspections to insure you understand the level of need the property presents.

3: Regular Home Loans Work

Another misconception people have about bank foreclosure is that these homes are being bought solely by the well heeled who can afford to fork over a great deal of cash.While some investors do this, most do not because it takes a bite out of their reserves.In addition, anyone can purchase a foreclosure with a standard home loan.

Bank foreclosure is not an appealing picture for many people, but for real estate investors, it can be an opportunity to get into a more affordable home quickly.

For more information please visit our Foreclosure Guide and our Loans Blog