HUDHomestore.com offers a new feature that selling agents and home buyers are going to want to know about!
Archive for the ‘HUD Sales Procedures’ Category
New! How To Locate HUD Home Bid Results
Wednesday, February 8th, 2012Role of FSM’s In Selling HUD Homes
Thursday, January 19th, 2012A new video has been posted to our YouTube channel with more information to help you get your arms around the process of selling a HUD Home.
The Opportunity For Investors At HUDHomestore
Wednesday, December 14th, 2011Wilmoth 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.
HUD Announces Changes To Selling Agent Bonus as of 12/1/11
Thursday, December 8th, 2011HUD Selling Agent Bonus Incentive Changes
Thursday, December 1st, 2011
As of December 1, HUD has changed the selling agent incentive plan that was available to agents in Florida and Indiana. The new incentive offers bonuses between $300 and $600 when properties close in 43 days or less. Another great reason to sell HUD homes!
You can read all the details of this change at our website including the requirements for how to document that you have earned the bonus. In general, we are finding that all HUD homes are ready to close in this time frame so the structure of this incentive places the burden on the selling agent and the buyers lender to perform. Something to consider when putting those bids together.
Where Is My HUD Home?
Wednesday, November 9th, 2011This question is not asking for directions to a home. It is a common question after an agent or buyer see a HUD home and follow up by visiting the HUDHomestore.com site..and are not able to locate the home. What does it mean when the listing services all still show the home active…but it seems to not exist according to HUDHomestore.com? We made a new video to explain and to actually show you how you can find out what the status is, plus a few tips for monitoring the property that do not involve the listing services.
HUD Selling Broker Registration-Put Away Your Credit Card!
Friday, October 21st, 2011There is only one way to register to be able to make bids on HUD homes…and you can complete it directly with HUD! Here is a simple step by step explanation of the process and what to avoid when you decide to sign up!
My Buyer Wants To Use Their Title Company
Monday, October 10th, 2011One of the more frequently asked questions is how can HUD force my buyer to use their settlement company? It is a mistaken notion that leads anybody to that conclusion. Here are the facts.
The Federal Real Estate Settlement and Procedures Act prohibits as a condition of sale that the buyer purchase title insurance through any particular provider. Indiana and Florida have similar codes that are as strict, if not stricter.
HUD has national closing agents who manage the closing process. Every county has a HUD closing agent.
If a buyer uses the HUD closing agent they will be provided a savings as HUD will pay the cost of settlement. This is why it is usually suggested as in the interests of the buyer, that the HUD closing agent be used.
The buyer though is free to use a different title company or settlement provider.
So, if you are an agent working with a buyer who insists they want to use a certain title company, you should explain to them the extra expense and the possibility that working in the HUD closing agent network might be advantageous to the process. Otherwise, you should not prevent the buyer from selecting a different settlement provider!
Also, if you are the selling agent, don’t have any skin in this game other than your selling agent fee. There are some very strict federal and state laws that prohibit compensation for leading a buyer to a certain closing provider. Go back and review the Real Estate Settlement and Procedures Act if you have any questions.
Home Buying Mistakes And How To Avoid Them (Pt 2)
Wednesday, September 14th, 2011
Yesterday we covered a few of the more significant mistakes I have seen buyers and their agents making that end up costing time and money. There are some additional items that can cause problems that may not be as obvious. Today I will share with you this list and some ways to make sure you avoid them.
John bought a foreclosed property based on the representations of the bank, listing agency, and his title policy. Except nobody really reviewed the legal description on the title work closely enough to question why the lot width was only 60 feet when the structure he was buying was 80 feet. John actually waived his option to obtain a survey with the bank. John ended up with a house that the master bedroom (an addition) was on another lot owned by the foreclosed owner. Except nobody had yet foreclosed on the second parcel because even the lender did not know to make the loan on both parcels when refinancing a few years back! A survey would have revealed this issue very early in the process. Don’t skip a survey! This is an extreme example but I can tell you it is not unusual to find fences and driveways someplace where they are not suppose to be!
I have written several posts about the importance of a home inspection. That is still the case. It is your most important step to ensure you can negotiate a solution to a problem that may not otherwise be discovered.
What happens to a buyer who goes to closing and does not stop and inspect the property before the closing? There are plenty of horror stories when it comes to buying vacant homes. How about the couple who rushed in from out of town to the closing of their investment property, signed all the papers and handed over their check, then went to their new investment. Shocked is the best word to describe their reaction to the fact all the drywall was destroyed because thieves had pulled every stitch of copper plumbing from the home the week before closing. That investment became a huge loss. In fact, the couple ruined their credit because they could not afford the repairs and never made a single payment on the loan they had obtained! Don’t go to closing without a final walk through inspection.
Make sure that the buyer knows what their out of pocket costs will be before negotiating an offer. Confirm that the purchase agreement has the seller paying all taxes, association charges, and assessments through the date of the closing. If you are buying a bank owned home, do not assume anything is “standard” that the bank will pay. I still receive phone calls the day before closing of a HUD home sale where the buyers agent is screaming that the settlement statement is incorrect as the buyer is being made to pay for an owner’s title policy. Agents assume that the seller will pay this and it is a very costly assumption. HUD does not, but you have to review their policy to know that. Usually when this costly mistake occurs the agent ends up paying for it and at a cost that is most of the average HUD home buyer agent fee!
Finally, as much as possible before closing get a copy of the settlement sheet, known as a HUD-1. Review it and make sure all the charges make sense and are as agreed. Settlement entities are left to interpret the purchase documents on many issues and they do make the occasional mistake. It is better to get them corrected before closing than to try and fix them at the table.
Now that you know my list, in your experience, what other buying mistakes exist?
“Hard To Sell” HUD Properties and What The Selling Agent Needs To Know
Thursday, September 8th, 2011
Recently, HUD made a change in the selling and listing agent compensation structure. This change affects homes on the lower end of the price spectrum..specifically homes with accepted bids under $42,000. Originally, when the new HUD contract (known as Marketing and Management 3) was introduced, there was a base minimum payment to selling and listing agents of $1250 per side, or $2500 total. So the formula that a selling agent could use to request their selling agent fee was up to 3% or $1250 minimum.
In August that all changed. Here is the announcement:
HUD has eliminated the minimum commission of $2500, split between the selling and listing agents, and it is no longer available on the HUD Homestore. Going forward, all listings will reflect a maximum 6% total commission, split between the selling and listing agents. As of now, HUD has no plans to increase the commission percentage beyond 6%, but only may do so on a case by case basis.
Please note this change affects the Local Listing Brokers, like Wilmoth Group, just as much as the selling agents.
The good news is the “case by case” exceptions are occurring and the selling agents need to know what to look for. HUD is using the term “hard to sell” to identify properties where the former $1250 minimum applies. These will be properties listed for less than $42,000. How to find out if the property you are considering is included? Go to www.HUDHomestore.com and look for the icon at the beginning of this post. It is the “hard to sell” icon and it signifies your ability, as a selling agent, to request a selling agent fee up to $1250!
As I look at this list today in Indiana and Florida, there are quite a few properties with this designation. It does not seem to be rarely used. That is good news for all affected. Of course, we should not be making decisions on selling any property based on the compensation offered. At least now you can adjust your expectations if a buyer is looking at under $42,000 HUD homes.
