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Foreclosures, VA and HUD Homes
Foreclosures are a reality of our economy, and foreclosures have been on the rise. Real estate gurus have been buying more and more late-night infomercial space to sell you information on how to make a fortune in foreclosures. However, it’s not that easy.
First of all, Minnesota is a very consumer-protective state and the foreclosure statutes are very complicated. "Buying" a home at the Sheriff’s sale is a risky business, and 9 times out of 10 an investor will not ultimately end up with the home, especially if it’s a great deal. Real foreclosure deals are few and far between in our current real estate market. Experienced foreclosure investors who understand the process and have lots of cash may be doing well in this business. Others have found themselves in serious trouble. In fact, the legislature is in the process of enacting new laws regarding foreclosures which will completely change the "game" and make it much, much more difficult to purchase foreclosures or have any interaction with homeowners in foreclosure without serious legal risks. There are severe civil penalties for not adhering to the new laws and disclosures. See the new laws here.
The reality is that most foreclosed homes are listed with real estate agents at full market value. Here is some information and helpful links to help you find information on these homes. Please keep in mind that the demand is high and the selection is low for these types of properties, so you really should have the help of an agent to help you find the best opportunity. In fact, many of these properties require you to use a Realtor in order to submit an offer on these properties. Please feel free to contact us for more information on any home you may be interested in purchasing.
What is a "HUD home"?
A "HUD Home" is a property where there was an FHA loan, and the property was foreclosed on by the lender. Because FHA insured the loan, the property goes back to the Department of Housing and Urban Development (HUD) and they in turn put the property up for sale.
Many people have the impression that HUD homes are run down, and in serious need of rehabilitation. They therefore perceive that these homes will be sold at a bargain price, well below market value. While this may have been more true in the past, HUD actually often prices their homes very competitively with the current market conditions. Depending on the number of people bidding on the home, it may sell for at or just below a comparable property being sold directly by an owner. The condition of the home depends entirely on what condition the former owner left the property in. Often, angry people who are losing their home will vandalize the home and remove anything that they can. That is the cause of the often poor condition. HUD homes are normally sold AS IS.
How do I find HUD homes?
In Minnesota, HUD homes are now listed with real estate brokers, just like any other home. They are on the multiple listing service, and available for anyone to see. You may come across HUD homes on the MLS and not even know that they are foreclosures. You can also look at HUD's list here or find a current text list here.
How do I buy a HUD home?
All offers on HUD properties must be submitted by a licensed real estate agent. Please contact us if you are interested. There is also additional information on HUD's website.
What is a VA home?
A VA home is similar to a HUD home, in that the Veteran's Administration originally insured the loan, and when the foreclosure took place, they took possession of the property. The VA has recently hired a REO company to list and dispose of these properties, so they also are listed with Realtors and appear on the Multiple Listing Service. Again, these homes will most likely be listed at full market value.
How do I find other foreclosed properties? I want a bargain!
There are many services online that sell foreclosure "information". I have to admit, I've even signed up for some myself out of curiosity. However, I've found that they do not provide information that is in any way useful for trying to purchase these properties. By the time these services get the information, the property has already been returned to the bank, and in most cases, the bank has the property listed on the MLS with a real estate broker. Therefore, it is just as easy to come across these properties in your regular home searches, without paying for a useless list. Again, they are normally listed at close to market value, and are sold AS IS.
Here are some links to some real REO (real estate owned; ie foreclosed) properties, which you may find helpful. If you would like to see any of these properties, please contact us. Keep in mind, most sites CHARGE you for this information; all we are providing it FREE, and all we ask is that you allow us to represent you in the purchase of your home.
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