What Steps to Take

Buying a home at a HUD auction can be intimidating. Experts offer these suggestions:

--Even if now is not the right time for you to buy, send for the brochures by calling (800) 299-5255 and become familiar with what’s out there. Attend the free pre-auction buyer awareness seminars, and familiarize yourself with the process by observing an auction as a non-bidding guest.

--Carefully inspect the property. Examine all doors and windows to make sure that they close properly. If they don’t, it could indicate foundation problems. Cracks in the exterior and interior walls might be due to structural damage. Stains on the ceiling or around pipes could indicate leaks. Inspect the condition of appliances, if any, light fixtures, paint, carpeting and kitchen and bathroom tile.

--Bring a camera or video camcorder and take lots of pictures. This will help keep each property’s pluses and minuses clear in your mind.

--Housing built before 1978 may contain lead-based paint (about 75% of all pre-1978 buildings do). Only a laboratory test can determine if this is the case. HUD will not pay for the cost of removal of lead-based paint.

--Consider a 203(K) loan, which combines financing for the mortgage and repairs. Funds earmarked for repairs are kept in an escrow account, and as the repairs are completed, the buyer is refunded from the account. Any left-over money is then placed toward the principle. Estimated cost of repairs is based on professional rates, but homeowners can save money by making the repairs themselves, if they choose.

--And worth stating again: Have a good time, but don’t get too carried away by the excitement of the moment. Go into the auction with a firm top bid and stick to it.