Everybody is talking about Foreclosure homes. Some buyers may be thinking about buying one, but what does it actually mean. Foreclosure homes are often described as REO (Real estate Owned) or HUD (Housing and Urban Development) homes.

When a home goes into foreclosure it means that the homeowner is struggling to keep abreast with his financial commitments and is behind with the mortgage payments. Needless to say that such does not happen overnight. When hard times hit it is normal that homeowners postpone repairs and maintenance, waiting for better times to come back. It is therefore of crucial importance that anyone thinking about buying an REO or HUD home has the property properly inspected. What you see is what you get, and what you don't see will also be yours!

It is not uncommon that the public thinks that foreclosure homes are priced below market value. Nothing is further from the truth: the lower price reflects the condition of the home. Besides, not all foreclosure homes are in need of repairs or updating. There are indeed some very nice cream puffs on the market, but they come far and between.

The most important difference between making an offer on a resale property and bidding on an REO or HUD home, is that the sellers of REO or HUD homes have no emotional attachment to the property. For them it is just a business transaction and low ball offers may not be worth their time and effort.

WHAT IS A HUD HOME?

A HUD home is a one-to-four unit residence acquired by the Department of Housing and Urban Development (HUD) as a result of a foreclosure on an FHA-insured mortgage. The Federal Housing Administration (FHA), which is part of HUD, provides federal mortgage insurance which ensures lenders will be reimbursed in the event homebuyers default on the mortgage. When a lender is forced to foreclose on an FHA-insured home because the owner can no longer make payments, the lender can file a claim with FHA for the balance due on the mortgage and convey title of the property to HUD.

Most HUD homes are offered on a priority basis to owner occupant buyers (people who are buying the home as their primary residence). After the priority period, unsold homes are then available to all buyers, including investors.

HUD homes are sold AS-IS. HUD does not make repairs nor provide warranties. HUD does not guarantee the condition of the house. Buyers must make sure the home is in the condition they are willing to accept.

HUD will pay closing costs up to 3% of the gross sales price. An Earnest Money check in the amount of $500 (sales price under $49,999) or $1,000 (sales price over $50,000) must be submitted with the offer as cashiers check, money order or certified funds.

The purchase of a HUD home requires a real estate broker/agent who is registered with HUD to do the electronic bidding for you. When the bid is accepted, all paperwork (which is rather extensive) needs to be submitted within 48 hours.

Please contact Kris@EastCobbHomeSales.com for an updated list of available HUD homes in Cobb, Cherokee, N. Fulton Counties.

WHAT IS A REO HOME?

An REO home is a property that went through the foreclosure procedure and is now owned by the bank or lender.