Short Answer: Yes
......and No.
HUD (Housing and Urban Development) conducts a complete inspection of the property. This inspection is disclosed to you via www.BidSect.com (in Louisville, Kentucky) prior to you making an offer. The banks don't typically do that.
HUD conducts their listing through a single broker in each area. Unlike other listing, the list agent does not receive any contracts, do not get contacted for showings and do not participate in the negotiations at all. Every HUD approved broker in the area has a key to every HUD home on the market. I am, of course, a HUD approved agent and have made offers on many HUD homes on behalf of my clients.
A HUD offer is submitted by your agent electronically via the internet. No matter when the offer is submitted, No offer is considered for acceptance until the property has been on the market for 10 days after the initial offering. As of the current date, first offerings are released on Friday and the bidding stops at 11:59 Sunday night (10 days later). The results are released the next day by noon on Monday. If Monday is a federal holiday, the deadline is still the same but the results are not released until the following day on Tuesday. I see this as an advantage that you have a clear, concise time that you can expect an answer from the Seller. Accepted or not, one of the primary complaints from buyers submitting offers on a foreclosure is the waiting game while the seller tries to get a higher offer or a multiple offer situation. The disadvantage is that you will most always have a multiple offer situation and you ALWAYS have to give your "Highest and Best" bid if you really want the property. Even if there aren't any other bidders, you won't know that until after the deadline and there is never an accurate indicator of how many people are even viewing the property (remember, every agent has a key and no appointment is necessary). You just never know.
Add to all the above that fact that numerous properties in the Louisville Market over the past year have been listed by HUD at a price considered to be substantially less than what the market value would be. Intentional or not, this creates a feeding frenzy that leads to a multitude of bidders and a sale price that far exceeds the list price. I saw a property that fetched almost $30k over list price in the last 12 months. I have had many successful bidders that I represent, who acknowledged that to win the bid must be over the list price. **If utilizing FHA funds to purchase, please understand that as a Buyer who bids more than the list price (which is the price the property appraised for by HUD), YOU have to pay the difference between the appraised value and the sale price. It cannot be financed by FHA backed funds. You have the options of paying cash or conventional financing.
If your offer is accepted, your agent has 24 hours following the day after the acknowledgment to overnight ALL the disclosure, disclaimers, agreements and copy of the earnest check. The critical thing to remember is that you are dealing with a government entity. This can translate to mean that EVERY "i" must be dotted and every "t" must be crossed. Everything must be signed in BLUE ink only. Every space must be initialed by the buyer. If a buyer initials the seller's blank, it must be redone. Every page should include the property number assigned by HUD "205-xxxxxxx" at the bottom of it. The Buyer's broker must initial his lines and must sign two documents himself. There is NO substitute for his signature without a formal Power of Attorney. HUD gives a total of 2 chances to get this correct. If any blank is wrong or missing information or documents, they will request that it be overnited correctly within 24 hours. The 2nd time they request corrections it is with a stern warning that the deal will be voided if the offer is not corrected and submitted correctly within 24 hours--Regardless of whether this is the fault of the buyer or their agent! EVERYTHING IN A HUD CONTRACT IS BOUND BY TERM "TIME IS OF THE ESSENCE". All of this is said so you appreciate that a knowledgeable professional must be facilitating the transaction for you or you risk losing your deal.
There are advantages and disadvantages to both (some banks offer special finance options on their REO properties to owner occupants--HUD doesn't). The most important advantage you can have is a savvy, experienced agent that understands the process and handles your deal in a competent fashion while negotiating the best deal you can get.
Expert Real Estate Advice
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