I Want to Buy a Foreclosure, Now What Do I Do?

You found a Foreclosure and want to submit an offer. Now what?

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. HUD properties require a special HUD Key for front door access.

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.
For more information about foreclosures and the HUD bidding process, check out this site http://www.articlefeeder.com/Real_Estate/Things_You_Must_Know_About_Buying_Foreclosures_in_Austin_and_Central_Texas.html