What we verified in “Buying a foreclosed (REO) or auction home: risks and steps”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. Under HUD's regulation (24 CFR §291.205), when HUD sells its homes one at a time, it generally sells them as-is, without repairs or warranties, through local brokers, and gives priority to buyers who will live in the home for a period of up to 30 days on homes offered with insured financing.

   Sources 1 · 24 CFR §291.205: 'it will generally sell the properties on an "as-is" basis, without repairs or warranties'; '(a)(1) ... sold through local real estate brokers'; '(a)(2) ... priority will be given to owner-occupant purchasers ... for a period of up to 30 days' · Checked October 31, 2026

2. According to Freddie Mac's HomeSteps, the First Look Initiative lets owner-occupant buyers, Neighborhood Stabilization Program (NSP) grantees and nonprofits engaged in community stabilization buy HomeSteps homes during their first 30 days on the market without competition from investors; and the buyer does not need to be a first-time buyer, as long as the home will be their primary residence.

   Sources 2 · Freddie Mac First Look Initiative: 'offers owner occupant homebuyers, Neighborhood Stabilization Program (NSP) grantees and non-profits engaged in community stabilization efforts the ability to purchase HomeSteps homes during their initial 30 days of listing without competition from investors'; 'The purchaser does not need to be a first-time homebuyer to be eligible provided that they are buying the home as their primary residence' · Checked October 31, 2026

3. According to HomeSteps, buying one of its homes is similar to buying almost any listed home: your agent contacts the listing agent, or, if you have no agent, you call the listing agent yourself; with the offer you provide the sales contract, a preapproval letter (or proof of funds for cash), earnest money in certified funds at contract execution (no personal checks or money orders) and HomeSteps addenda; the offer must be in writing and signed by all buyers; complete offers are usually answered or countered within about 48 hours; with multiple offers at once, everyone is asked for their highest and best offer by a set date and time; and legal acceptance happens only when all parties sign the contract.

   Sources 3 · HomeSteps, Making an Offer: 'similar to the process for buying just about any home listed on the market'; 'If you do not have a real estate agent, you can call the listing agent'; 'Sales contract Pre-approval letter Proof of funds for cash sales Earnest money (must be in certified funds at contract execution - no personal checks or money orders) Necessary HomeSteps addenda'; 'The offer must be in writing'; 'signed and dated by all buyers'; 'On average, complete offers are responded to or countered within 48 hours'; 'submit their highest and best offer by a specific date and time'; 'Legal acceptance occurs only when the contract is fully executed by all parties' · Checked October 31, 2026

4. Under Florida law (§45.031), in a judicial sale the court directs the clerk to sell the property at public auction on a day no sooner than 20 days and no later than 35 days after the judgment, with exceptions; at the sale, the winning bidder must post with the clerk a deposit equal to 5% of the final bid; if the balance is not paid in time, the clerk re-advertises the sale and pays its costs from that deposit; after the sale the clerk files a certificate of sale; and if no objections are filed within 10 days, the clerk files the certificate of title, the sale stands confirmed and title passes to the buyer.

   Sources 4 · Florida Statutes §45.031(1)(a): 'sell the property at public sale on a specified day that shall be not less than 20 days or more than 35 days after the date thereof'; (3): 'the successful high bidder shall post with the clerk a deposit equal to 5 percent of the final bid'; 'If final payment is not made within the prescribed period, the clerk shall readvertise the sale ... and pay all costs of the sale from the deposit'; (4): 'the clerk shall promptly file a certificate of sale'; (5): 'If no objections to the sale are filed within 10 days after filing the certificate of sale, the clerk shall file a certificate of title'; (6): 'the sale shall stand confirmed, and title to the property shall pass' · Checked October 31, 2026

5. Under the Protecting Tenants at Foreclosure Act (section 702 of Public Law 111-22, note to 12 U.S.C. §5220), in a foreclosure the successor in interest must give each bona fide tenant a notice to vacate at least 90 days ahead; a tenant with a bona fide lease signed before the foreclosure notice may stay until it ends, unless the home is sold to someone who will live in it as a primary residence, and even then gets the 90-day notice; and the law does not change state or local laws that give more time or more protection.

   Sources 5 · Pub. L. 111-22, §702(a), note under 12 U.S.C. §5220: 'a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice'; 'under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice'; 'any State or local law that provides longer time periods or other additional protections' · Checked October 31, 2026

6. According to HUD Handbook 4000.1, a HUD-owned (REO) home can be financed with a 203(k) rehabilitation loan if the sales contract or an addendum identifies it as eligible, and investors buying HUD homes cannot use a 203(k).

   Sources 6 · Handbook 4000.1, II.A.8.a.iii, p. 392: 'a HUD Real Estate Owned (REO) Property: the Property is identified as eligible for 203(k) financing as evidenced in the sales contract or addendum. Investor purchases of HUD REO Properties are not eligible for 203(k) financing' · Checked October 31, 2026

7. According to the CFPB, the counseling agencies on its list are approved by HUD and can offer independent advice about whether a set of mortgage loan terms fits your goals and situation, often at little or no cost.

   Sources 7 · Find a housing counselor: 'approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you' · Checked October 31, 2026