Best Brain Drain: HUD Foreclosures Made Simple

Bestbraindrain.com

Great ideas, helpful information and unique money saving tips that you will find nowhere else to better your life and make things easier

HUD Foreclosures Made Simple

Posted by Blueeyes at 10/23/2007 11:05 PM

Categories: Educational, Money, Finance, Interesting, Real Estate, HOWTO, home

By now you most likely have heard of HUD foreclosures and have at least a vague concept or idea of what they are. By searching the web and local real estate investment groups there is no shortage of people selling books, tapes, cd’s and even dvd programs on how to buy and invest in HUD homes. The biggest problem I have with that is that there is absolutely no need for any of these programs and most are just scams to get your money (see our article on Foreclosuresdaily.com for more on this). I will tell you in this article all you need to know about HUD homes and how to properly invest in them.

Before I tell you everything you need to know about HUD foreclosures, let me give you one piece of advice – according to the FTC (Federal Trade Commission), numerous state attorney generals (almost all 50 of them), the Better Business Bureau, lawyers, etc… almost every real estate investment program, bootcamp, seminar, etc… is an over priced scam and a complete rip off. If you don’t believe me see our article on Foreclosuresdaily.com and real estate investment scams and see for yourself (the actual FTC and other links are all clearly listed for you to see).

Basically, if someone like Larry Goins or Dave Vanhoose tell you that its easy and you don’t even have to leave your home or even look at the properties they are lying to you! Common sense will tell you with any investment that you must do your homework. You must look at and into (title search for outstanding loans and liens) before buying properties. Foreclosuresdaily.com CEO Mike Kane said it best in a Youtube video where he basically stated that they decided to show other people how to do it as this was much easier for them than buying and selling houses – yes, real estate investing is not easy and takes a lot of time and hard work, its much easier to scam and ripoff newbie investors with promises of quick and easy riches than to go out there and practice what you preach. You can easily go out and buy a few books at your local bookstore on short sales, pre foreclosures, etc… and for much less money learn far more than these lying vermin that call themselves sales gurus could ever tell you!

Now that is all I will say about real estate scammers and slime. On to HUD homes. I will make this short and sweet and leave out all the fluff. HUD homes are government owned foreclosed homes. They are similar to REO (bank owned foreclosures) in that unlike with the foreclosure auctions and short sales, they come with clear title, no tenents to evict and fewer headaches. Generally the only headaches you will incur with a HUD home are the amount of repairs that are needed. Many don’t need much except for a little cosmetic work like paint and maybe some minor sheetrock repairs.

If you want to rent one out you will probably have to get appliances as many don’t have these (the previous tenant that was foreclosed upon most likely took them when they left). The general rule with a HUD home is to go and look and check out the home before you place a bid on it. Now this will all depend on where you live and the general age of the house and the neighborhood. In some areas like Charlotte, Nevada, California and Florida most of the homes are very new and so you will not need the same level of inspection as you may with older communities and cities. Older properties tend to require a lot more work and you should definitely take this into consideration when placing a bid on them.

Now to place a bid and see what houses HUD actually has for sale go to HUD.gov (not hud.com which is not owned by or run by HUD). At HUD.gov you will go to the top right of the home page where it says buy a HUD home (It actually now reads Homes For Sale). Click where it says buy a HUD home. Then click on the first link where it says from HUD (there are other entities there which you may want to peruse through for some great deals, but most do not have much to offer and run their sales in their own way). Now you will pick your state and go to your listings. To start I would pick by city and start with as few listings as possible (if you pick all the cities in your state that will most likely be way too many houses to wade through).

Now you will see you can pick through the listings and you will see houses, condos and mobile homes. Sometimes they will even have lots and parceled or un-parceled land. The listings will state what the current appraised value is and if there is a discount or price reduction on the property. You can click to a map or more property information. For most listings there is a picture of the property so you can get an idea of what you are looking at. Next thing is, before you go and call your real estate agent to place a bid, is to go and look at the house. You will most likely need a licensed real estate agent to unlock the property and let you in. Make sure you always look at every property before you ever consider placing a bid on it.

Next, if you decided that the house is what you were looking for for yourself or for an investment, you have to go through a HUD licensed broker. Make sure your agent can deal with HUD. If you don’t have an agent or yours is not able to deal with HUD you can easily get a list of local realtors that are right through your local HUD website. Next they will want to meet with you and have you sign a binding offer and take a check for $1,000 earnest money to submit your offer. Generally unless you are in a bad area HUD will only consider offers of 10 to maybe at most 15% below their value listed on the website. You can look at the bid results and bid statistics from previous sales to see what others are doing. There’s even a link for how to buy a HUD home.

A HUD home, just like an REO, is a safer investment than buying at the courthouse steps or from a pre-foreclosure and is quite easy to do. Just make sure you do your homework (due diligence) by researching the area to see if it’s a good buy, make sure you look at the house inside and out – if you can’t look at it then do not bid on it – ever, regardless what the self proclaimed investment gurus say – besides most of them don’t even invest, they just sell expensive and completely unnecessary cd’s and seminars.) Ask the real estate agent what they think of your potential offering price and if they think that property is a good deal. They should quickly be able to tell you and they should be very helpful as they still get paid a 5% commission on the purchase price (the max HUD will allow). The rest is all getting out there and doing it.

So there you have it, how to find, look at and buy a HUD home and it didn’t even cost you a penny to read this. The gurus are mad that I am giving better information than they have out for free in articles like this and other ones you can easily find on this website under real estate entries. But, you know what; the difference is I like to help people. The self proclaimed gurus like to scam people. I know that I sleep better at night knowing that I have helped someone and made the world a better place. If you feel this article has been beneficial to you please tell others about us and provide a link back to us so more people can benefit as you have.