Government Foreclosures

Government foreclosures are properties that have been repossessed by the lender because the borrower could not make their payments. In the case of a government foreclosure, the lender is a government agency such as Fannie Mae, Freddie Mac the Veterans Affairs (VA) or the Department of Housing and Urban Development (HUD).

Why do investors choose to buy government foreclosed homes?

Federal foreclosures are a great investment option because they are so affordable. Investors buy cheap houses owned by the government at a great discount over traditional properties. Then, they can flip, rent or occupy the property. When investing in government owned homes, the opportunity to create a rental income or build wealth through selling the property at a profit is attractive to buyers.

How to find government foreclosures

Government property is for sale in every state and county. A real estate agent can help you find local government foreclosure listings. You can also find federal foreclosures listed online. In some municipal areas, the city may have special registries or programs that help buyers find and purchase foreclosures.

Are there government foreclosure auctions?

Foreclosure auctions take place for all types of real estate, including government property for sale. When foreclosed homes go to auction, they are sold to the highest bidder. A government auction might include government seized properties, or those whose borrowers have defaulted on their loan. There is often a minimum price set, which helps the lender recoup the cost of their investment. Typically, auction properties are sold as-is, so the buyer has to be aware that before bidding.

What about government incentives to buy foreclosure homes?

Government incentives may be available for foreclosures. Purchase incentives and renovation incentives along with government home loan programs are all possible options. In addition, there are available first time home buyer government programs for those who have not previously owned a home. Government agencies might also offer government grants for homes that need repair in order to entice buyers to purchase those homes and renovate them.

Buying government foreclosed homes for sale

For many, buying a government foreclosure starts with an online search or a real estate agent. The next steps aren’t very different than buying a regular home.

Things to consider when buying foreclosed properties:

  • Save for a down payment
  • Select a location to target for your search
  • Get financing
  • Find a real estate agent
  • Do your research and get comparables from your real estate agent
  • Find the property and make an offer or visit an auction
  • Get an inspection so you will know what repairs are needed
  • Close on your home.

Are there taxes involved when buying government foreclosures?

There may be taxes assessed to the borrower who has been foreclosed on, because the difference between what is owed on the property and what the lender can sell it for can be treated as income.

When buying a foreclosed property, you will want to make sure the title is clear and doesn’t have a tax lien or other lien that would have to be paid before you can get the full title.

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