Wilmoth Group offers classes for selling agents on how to successfully sell HUD homes. These classes offer several little-known tips that I share to assist agents in being HUD homes experts.
One of the issues that commonly is of interest is how to find HUD homes for investors. Most agents have heard that the owner-occupant preference period has been extended under the Marketing and Management III contract. There is some misunderstanding on this point, and it is in that confusion lies a golden opportunity for investors.
I will try and keep this simple. Come to a class to dig deeper into the details. Basically, HUD provides information for FHA buyers in each home’s listing that assists the FHA buyer in learnign if the home is approved for FHA financing or not. Homes that are approved for FHA financing can include properties that an FHA appraiser has identified up to $5000 of repairs. There is a process for the FHA buyer to complete those repairs and have FHA financing. If the HUD home does not qualify for straight up FHA or the $5000 repairs program (FHA 203B) then HUD places the letters UI in the FHA financing category on the listing.
The approved FHA (IN) and the 203B (IN w/Escrow) properties all have 30 days for owner occupant purchasers to have priority. No investor bids are possible until day 31. So one option for investors is to wait for these properties to hit day 31. From experience, not many of them do. They are priced well and the advantages for FHA buyers are too great.
It is the properties labeled for FHA financing as UI that you should search for investors. Look for the new ones that come on the market. It is possible they may have repairs that are as low as $5100-remember they did not qualify for the FHA 203B. Here is the kicker..HUD only has a five day owner occupant preference period for these properties! On day 6 of the listing for UI properties, investor bids are accepted.
Increasingly, banks and government agencies are making strong efforts to only sell to owner occupants. The game for investors has turned more to auctions and bulk sales. Bulk sales are for deep pockets. Here is a way the smaller investor can bid on properties shortly after they have hit the market. Combined with the possibility that the amount of repairs may not be substantial, this is the opportunity for your investors to participate in buying HUD homes.