Q: My question is about HUD foreclosure homes. I have been watching the HUD listings in my town. Recently, a property that had been previously listed for $59,000 was foreclosed on by HUD and relisted for $21,500.

My sister put in a bid as owner occupant for $1,000 over the asking price. She offered to pay cash.

She was informed today the bid was lost and a real estate investor purchased the home for $1,000 less than our owner occupied bid. It seems odd that the property was marked down by $38,000 and was then sold for even less to a real estate investor when an owner who would have occupied the property offered $2,000 more.

You seem to know the market of real estate. I was just wondering about all these government foreclosures. Are all these government entities cheater home buyers and simply stuffing their pockets with gold?

A: Thanks for taking the time to write. The scenario you describe sounds very different from the automated process by which HUD homes are supposed to be sold.

HUD homes are properties that were financed with FHA loans that went bad. FHA forecloses on the property and it becomes a HUD home. HUD contracts with companies across the country to manage the sale of HUD homes online.

I’ve been told that buyers who will use the HUD home as a primary residence have a two-week lead over investors when it comes to bidding on these homes. I wonder if your bid was placed correctly online.

Supposedly, only HUD-certified real estate agents can place a bid for a HUD home, on behalf of a buyer or investor. But, some agents may be better at it than others.

It’s possible that the agent your sister used didn’t work the system as it was intended or there were other forces at work. You can search through the pending sales to see which agents are listed the most often, and which agents represent the winning bids. This is one way to find an agent with the most experience with these types of homes.

But it’s also possible that the winning bidder said he was going to live in the property as a primary residence but in fact plans to rent it out. I don’t know how you get around misrepresentation like that, but it would be worth following up to find out.

I’d investigate further. You can always file a complaint with the local HUD office.