An Overview on Buying Tax Foreclosure Homes

While most of the homes that go through foreclosure, do so because of the homeowner’s inability to repay his/her mortgage (bank foreclosures), a home can also be foreclosed upon by different government bodies upon the home owner’s inability to pay his/her taxes.

These tax foreclosure homes are then transferred to the Department of Housing and Urban Development, and are often referred to as HUD homes. Also part of HUD homes are homes which were bought through loans which were backed by FHA insurances, wherein the titles were transferred to FHA after it paid the lenders in question the outstanding mortgage amounts.

The process involved in buying tax foreclosed homes does vary from the process involved in buying bank foreclosures and it would, therefore, be in your best interest to get all the knowledge you can about the process.

The first thing you need to know is that to buy these homes you would need to get in touch with a government approved realtor/real estate agent. You can find lists of these agents over the internet, or can simply refer to the local yellow pages and then make some phone calls.

The reason that you need to get in touch with a government approved agent is that these homes are sold through a process wherein you, the buyer, would need to place a sealed bid for the home in question through these agents. Besides helping you take your bid forward, these agents also help you in having these homes inspected.

You should also know that, if included in the original contract for the home’s sale, the Department of Housing and Urban Development pays the fee of the agent involved, and this fee can be as much as 6% of the home’s selling price.

All the sealed bids that are received for any particular home are opened together. The person who has placed the highest bid usually gets the house and is informed through his/her agent. In selling these homes, the Department of Housing and Urban Development gives first preference to people who intend to live in these homes.

Since there are a number of tax foreclosures homes strewn all around, it could be well worth your while in looking at them as options as and when you decide to buy a house.