The Boyenga Team | Silicon Valley REALTORSĀ®

How To Buy a Foreclosure

Buying foreclosures is surely one of the most attractive ways to build equity almost immediately.
If you buy a home at $60,000 when it's worth $100,000, you've instantly built net worth. You can then take this equity you've built and either rent out your real estate investment for a positive cash flow, or sell the property (also known as flipping) for an immediate profit.
There are necessary precautions and risk assessments you must perform before putting your hard earned capital on a real estate investment.
The more research you perform, the better off you will be making the right decision.
If you've ever considered purchasing a HUD home or any type of real estate, I recommend you read on to learn about the process of buying homes owned by the government and advertised for sale by the Housing and Urban Development.

Buying a HUD Home

First of all, what exactly is a HUD home? A HUD home may be any type of residence (single family, multifamily, condo, etc.) which has been deeded (transferred title) back to FHA (Federal Housing Administration) or HUD (Housing and Urban Development) by lenders whose had foreclosed on a FHA-insured loan.

That's a mouthful, isn't it? In lamens terms, it's a repossessed home that is owned by the government.

Why go through so much of a process when you can have all of the work done for you for free? The Boyenga Team can guide you and help you throughout the process of buying a HUD home, so contact us to begin the process.

Beginning the Search Yourself

There are two ways to receive the listings from HUD. You can contact the Boyenga Team, or you can begin your search directly at

Assuming you chose to do a search through, you'll see a window open, and you must now select your state. For Silicon Valley and/or San Mateo Counties, we would select, "California". Next, click the "Search" button, to begin your home search.

Securing Financing

There are three ways a property can be financed. Under "FHA Financing Insurability" for each property description, you'll find that it will either say:

FHA Insured - FHA financing is available.

FHA Uninsured - FHA financing is not available. You must use conventional financing.

Insured with Escrow - FHA financing available and if you are using FHA financing, a repair escrow is given. (A certain amount of money to do necessary repairs with)

Once You've Found One

Found a home you're interested in? Fantastic! We recommend to take a drive by the residence and get a feel for the neighborhood and surrounding areas. You may also get a feel for the home curb appeal and get a preliminary look at it's cosmetic condition. If you would like to take a look at the home thereafter, feel free to contact one of our consultants and we'd be happy to come out and show you the property.

Before we come out we will ask if you have secured financing. The foreclosure market is so volatile, that if you are planning on bidding, you must not waste time! Getting pre-approved for a mortgage is the best way to minimize the risk, as you don't have time to waste with foreclosure deadlines. Once you're pre-approved for financing, we can come out and show the home to you.

Submitting a Bid

Homes are added to the datatbase, and listed for sale each Friday. During the first 10 days of sale, bidders who will occupy the property get preference and are allowed to bid first. If it is still available after 10 days, investors may bid on the property as well.

Each bid must be submitted by 11:59PM Pacific Standaqrd time on the specified due date. You must get your bid in on the property before the due date and time for your offer to be considered! You cannot place bids yourself. You must have a HUD registered consultant place the bid on your behalf.

Earnest Money - If the home is priced below $500,000, you will need to be able to provide a certified check in the amount of $5000. If the home is priced over $500,000, the earnest money needed is $10,000. If you are unsuccessful in bidding, you will receive your earnest money back.

Inspecting The Home

All HUD homes are sold as-is. HUD will allow you 15 days to perform an inspection on the home to gauge the costs of renovation (if needed). The electricity is not provided during this time and you will have to pay for a few days of activation for a licensed state inspector to perform the inspection.

If the house was built before 1978, you may need to get a lead based paint inspection. Homes built prior to 1978 all have the possibility of containing lead based paint in the home which could be hazardous to your heath.

Continue this series, with our next article, How To Buy A Foreclosure - Part 2.

Contact us when you are ready to invest in a foreclosure.

Please feel free to browse through this site to explore Silicon Valley's finest developments.  This comprehensive tool offers direct access to the latest properties for sale in the Greater Silicon valley. Featuring extensive community information, consumer links, rentals, school information, free reports, answers to commonly asked real estate questions, and more, you will find everything about real estate within one easy source.

Contacting the Boyenga Team is the best way to learn more about the real estate market. Feel free to call us at 408.373.1660, or send us an email by clicking here.

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