Save money with a HUD foreclosure

While buying foreclosed properties is one way to save on the cost of a house, the process isn’t as easy as the late-night infomercials would have you believe.

The condition of the house can be an obstacle. Foreclosure doesn’t happen overnight, and it’s likely that needed repairs haven’t been completed for a long time. Unfortunately, in many cases you can’t inspect the property until you buy it. By the time you discover and pay for all the repairs, the house is no bargain.

Someone might still be living at the property. It could be the elderly (and ill) parents of the owner. Do you really want to hire a lawyer and throw them out on the street? And sometimes an owner who’s being evicted from his home will do a lot of damage on the way out.

A safer way to buy a foreclosure is through HUD. Properties that have been FHA-insured are listed online when the lender forecloses.

Start by locating a HUD Registered Agent, a broker who is approved for dealing with HUD foreclosures. An approved broker can help you navigate the maze and submit your bid in the first-round offer period, giving your bid a better chance of being accepted. (HUD pays the commission if the bid contains that language.) The houses are listed only for five days, and new ones are listed each week. That’s another way an approved broker can help you: You’ll be able to submit an offer quickly.

An approved broker will also make sure you don’t miss any of the good programs. For example, there’s the Good Neighbor Initiative. In certain revitalization areas, if you are an emergency medical technician, firefighter, law enforcement officer or teacher, you could qualify for as much as 50 percent off the list price via the Good Neighbor Next Door program if you live in the house for three years.

Remember that these houses are sold “As-Is.” But under each HUD listing you’ll find links to the inspection reports for lead-based paint and the property condition, along with warnings about needed repairs.

For more information on buying foreclosures from HUD, check its Web site at www.hud.gov/homes/ for homes in your area. Or call (800) 569-4287 to find a HUD counselor near you.