Buying a foreclosure can be a great opportunity for the right buyer. There are important things you need to know before you decide to buy a foreclosure home in Austin and Central Texas.
What is a Foreclosure / HUD Home?
Another name for a foreclosure home is "HUD Home" and it is defined as a residential property (1-4 units) that has been acquired by HUD after the home has been through foreclosure filings on an FHA-insured mortgage. HUD will become the property owner and attempt to recoup the mortgage writer's loss (FHA) after the formal foreclosure proceedings.
Where can I go to search foreclosures?
One of the most popular places to search for foreclosures is RealtyTrac. They offer in-depth information such as liens, pre-foreclosure and REO property searches. However, you will need to subscribe and pay a hefty fee for access to their information.
An alternative to this is to spend some time looking through local REALTOR websites in your area on search engines. There's a great chance that an agent in your area offers access to searching local foreclosures for free. I offer a free foreclosure search tool on my site that allows you to search foreclosures by map, by zip code, by school district, by address and more in the Austin and Central Texas area.
You've searched Austin Foreclosures and want to submit an offer. Now what?
If you are in the Austin and Central Texas area, you will need to work with a HUD-registered REALTOR who is approved to transact HUD Homes and has experience with the HUD purchasing process -- you cannot submit a bid or view the inside of any foreclosure properties without a HUD-registered agent. This may be true in other cities and states, as well.
In Central Texas, foreclosures are purchased through a blind online auction process. You will have to put your best foot forward if you want to have your bid accepted, as you will have no idea what price or how many others have bid. When a property is first listed on the online HUD auction, there is usually a 7-day period where the auction house will compile bids, and open them all on the 7th evening. If there where no bids during the first 7-day period, it will become a daily auction.
Bids submitted from buyers who intend to occupy the property have a higher precedence than those from investors; in other words, if an investor makes and offer to buy an Austin foreclosure and an owner-occupied buyer also makes an offer on the same property, the owner-occupied offer will win even if the offering price was lower. This is because the government is aware that someone will more likely stop paying on an investment property than their primary residence. Don't think that you can just "say" that you're going to be owner-occupied and gain an advantage -- I have known HUD to randomly "check-in" on sold properties by sending someone out to ensure that they are in fact owner-occupied.
Another important difference in buying a HUD home vs. a non-HUD home is that there is no option period, and all foreclosed homes are sold as-is. HUD will give you an opportunity to perform an inspection, however they will not make any repairs to any foreclosed home they sell. If you are not in the Austin or Central Texas area, be sure to check with your local REALTOR to see if the same guidelines apply.
Is buying a foreclosure right for you?
As you can see, the process for buying a HUD home is quite different than buying a resale home in Austin and Central Texas. The buyer of a HUD home has to be willing to place a firm offer up front on the home, and be willing to have that offer accepted and purchase the property as-is. It is best to find an agent who is familiar with the HUD process & can effectively value the subject property and offer quantitative assistance on how much to bid.
Things You Must Know About Buying Foreclosures