The booming industry of real estate has always been paying attention to two aspects: minimal cost investments and excellent profits. The real estate market has specialized in different fields and has separated single family from multifamily real estate, bank owned from government owned properties, HUD homes from foreclosure homes. Realtors struggle to get to the buyers hearts and make them believe that what they sell is the best one can get in terms of price, neighborhood, size and … everything.

Although sometimes baffled by the onslaught of market reporting, listings and information service, costumers and industry specialists seem to agree on one thing: investing in foreclosure homes and HUD homes can provide outstanding profits.

HUD homes are 1 to 4 unit residential properties attained by HUD (United States Department of Housing and Urban Development) as a result of a foreclosure action on a government-sponsored mortgage loan. In contrast, foreclosure homes are properties whose owners failed to pay the mortgage loans subsidized by banks (or other lenders). The common factor in these buying opportunities is that equally foreclosure homes and HUD homes are sold at appraised or below appraised values. Unique and flexible sales agreements are easy to get with generous loan terms and low down cash payments. But, no matter what your choice is - foreclosure homes or HUD homes, you first have to make an investing overview to locate loans in default, to inspect and evaluate the property, determine the market value, fix-up costs and potential profits, and only afterwards state your offer.

Theoretically, Foreclosure homes and HUD homes can be bought by anyone who has cash or can qualify for a loan, in almost every state, but don’t expect to find any available HUD homes in California and the rest of the Southwest! The inventory in these areas is more or less void because the HUD homes simply cannot pull through the foreclosure process, being snapped up in the early stages. HUD homes are first offered to the people who bought the properties to make them their residence. It is intended for the buyers of these properties to actually reside at that property, for at least one year. Following the priority period for owner-occupants, the unsold HUD homes are made available to all buyers, including investors. HUD homes for auction are sold in “AS-IS” condition, without any warranty or repairs done. The bidding process is done through the internet, solely by an approved real estate agent, without charge for the buyer, as HUD pays 6% sales commission to agents involved in HUD homes sale. Also, HUD pays up

to 5 percent of the closing costs, but does not offer financing directly, being the buyer’s job to rummage around for a lender to find the best loan terms.

Investing in foreclosure homes gives us many reasons to consider it a wise and well-thought of strategy for gaining money and becoming rich. The mortgage foreclosure process creates two moments in time when a convenient agreement can be made. One can purchase a home in the pre-foreclosure phase or in the auction phase. In any of these stages, you deal with house owners that have to sell or otherwise it is likely to lose their house and get nothing. So time is not on their side and that is why they are willing to accept deep discounts. The risk in buying a foreclosure home is quite low since you have the time to do research, run sales comparables and evaluate the property. You are not troubled by many competitors and you don’t even have to work with realtors when purchasing foreclosure homes. Therefore you get to save considerably.

As shown, the buying process of HUD homes is quite different from that of foreclosure homes, each having its own advantages. Nonetheless, HUD homes and foreclosure homes are the best way to consistently come across amazing real estate bargains. You are buying equity at a discount that “breaks” the market!

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