|As the term implies, government foreclosure homes are sold by the government (or the Housing and Urban Development - HUD). Why would the government be selling a home? It will sometimes seize a property because the owner has not paid the required taxes on the property. In this case, the government repossess the property in the hopes of reselling it in order to cut its losses. There are other cases in which the government will take a home such as in the instance of a property owner who commits a crime on the property (the most common instances of this include drug manufacturing or sales). Whatever the case may be, the government is eager to get back its money and as in many other foreclosures, government foreclosure homes are often sold below the market value price.
Tax sale homes are the most sought-after deals in the foreclosure industry and are usually held between April and June. You can get extremely good deals on these types of homes because you may only need to pay off the property taxes that the owner of the home neglected to pay. This can end up being significantly lower than the worth of the home itself.
Homes that were previously involved in some sort of criminal activity are often sold at a public auction to the highest bidder and the opening bid for these types of homes can be very low. The government has compiled a list of homes that are in foreclosure and it's completely free to take a look at.
Some things you want to keep in mind. . .
HUD Homes are sold "as-is", no matter what. So you need to figure out if it's worth your time, money and effort to invest in a home. The necessary repairs may be more trouble than the home is worth. Buyers have 15 days (starting at the time the buyer signs the contract) to get the home inspection. You must also obtain written permission from the HUD to have the utilities turned on.
Property condition reports provided by the HUD can be helpful in getting a superficial look at homes, but these should in no way be used as a substitute for a home inspection.
The good news is that not all HUD homes need complete renovation. In fact, some jmay need only carpet and/or fresh paint. It is possible to buy a HUD home that is in move-in condition. No matter what the state of the home, most buyers decide that new carpet or flooring and paint are the universal fix that everyone wants on their homes. However, extensive renovation projects usually only appeal to the handy do-it-yourselfers. Rennovation can easily take up to a year to complete.
Buying government foreclosure homes can be a little risky. The most important factor to consider is that these homes come as they are--so you need to fully understand the condition they are in.