Monday, November 14, 2011 / by Ira Miskin
Earlier this year one of our Team's Realtors purchased a forlorn and somewhat neglected foreclosed town home in a pleasant town home community in Kennesaw, just a few minutes from Kennesaw State University. She purchased it for cash at a low enough price so that the cost of renovation still kept the overall cost of the property below market value. Right next door was another not yet, but soon to be foreclosed townhome. Like many residential single family and townhome communities in Kennesaw, this quiet neighborhood has weathered its share of foreclosures and short sales causing property values to plummet.
The great deal she got on a now lovely home for this young first-time home buying couple is typical of the kinds of great deals to be had if Buyers and their Realtors spend the time doing their homework and having the patience to wait for the right property to come along. But what of the townhome next door?
A few weeks ago it returned to the market as a HUD-owned property. Many Buyers' Realtors shy away from showing their Clients HUD-owned properties because they are not very easy to buy, and take extra work and effort to get a HUD transaction completed. The purchasing process is actually a bidding process which demands all information is provided initially through the HUD transactional website - not always an easy site to navigate - with a process of bidding and waiting that is unresponsive and somewhat arcane. The HUD listing agent representing the property on behalf of HUD has little to do with the transaction at the outset and since there is no human being to interact with as in most other residential real estate transactions, reporting progress to your Clients and helping them through the wait and often disappointment of not winning the property can be daunting. However, once a Realtor understands the HUD system - which is actually not all that difficult to learn - helping clients benefit from the advantages of buying a HUD property can be rewarding for our Clients.
A huge plus for the Buyer is HUD's $100 down payment purchase plan. Buyers can purchase a new home needing good credit but very little up-front cash. HUD will allow up to 3% of the purchase price to be credited to the Buyer to apply toward paying the Buyer's customary closing costs. If the HUD property appraises for more than the selling price, the FHA upfront insurance fee which pays for the first year of FHA loan insurance, can be rolled into the home loan, again conserving the Buyer's cash. When purchasing a HUD property using the 203K renovation loan program, most if not all the cost of bringing the property back to life can also be incorporated into the Buyer's home loan.
Investors buy HUD properties for use as income producing rental properties or to renovate and resell at a profit. But Buyers of all types and needs, from singles to families, and first-time buyers to empty-nester down-sizers can all take advantage of a good program that can and often does help communities ravaged by the sub-prime mortgage debacle regain its footing, standing and value.
Whether you're buying a home for twenty thousand dollars or two hundred thousand dollars, your Realtor and their Team - one who is not afraid of helping Buyers navigate through the HUD maze can help you find a good property at a great price.
Remember, HUD homes come in all shapes and sizes.
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