Part 1: Everything You Always Wanted to Know about HUD homes.

The above was a HUD home.  What does that mean?  Hud homes are homes lenders foreclosed on and HUD purchased them at a discounted rate and will put them on the market for homeowners.  There are several steps in this process.  But first know to find the homes on the market go to hudhomestore.com.  When you get there, click on the map for the state you are interested in.  A box will pop up and you can type in the county you are interested in and all the houses that are for sale through Hud will pop up.  If you click on a certain property, a page will come up with its picture and a bunch of choices and information about the property.  One choice that is important is the Addendums as that page as the property inspection report and tells you what they KNOW is wrong with the property.  They will give an estimate of the price to fix the problems they know about.  That doesn't mean there is nothing else wrong with the property, just what they found with their inspections.  But you are buying the property "as is".  HUD makes NO repairs. 

There are three types of listings:  lottery, exclusive, and extended.  What does that mean?  Lottery are Good Neighbor Homes.  If you are a nurse, a policeman, a fireman, an EMT, or a teacher, you can by that property for HALF the listed price.  Not a bad deal!!  But you must live in the home for a certain amount of time, or owe the other half of the listed price.  These listings last a certain amount of time, and if no offer is accepted, they change to Exclusive listings.

Exclusive listings are for home owners.  You must live in the house, it can't be an investment property for you.  If they find you never lived in the home but used it as an investment, they can actually charge you with fraud, and if your realtor knew you were going to use it as an investment instead of a home, they too can be charged and lose their license.  Don't try and fool HUD!!
They have a set date for bids to be opened, and if they open these bids and there are no acceptable ones, they they'll stay day to day for a certain number of days and they'll open the bids daily.  After that time period, the listing becomes Extended.

An Extended listing is now open to everyone, even investors.  Knowing that 25% of the homes sold in August were short sales and REOs (repos) you know that there are plenty of investors out there waiting for these Extended listings.  These homes usually need a lot of repairs, but at the price you can get them, usually an investor can make the repairs, fix the home up to look nice, and then resell and make a profit, or turn it into a rental. 

Two of my children have bought HUD homes in the Exclusive listing time period and gotten great homes for bargains.  One home is now appraised at $155,000 and he paid $100,000, and did less than $3,000 repairs to it.  The other got a 2300, 4 bedroom, 3 bath, two story valued at least at $125,000 and possibly more as it is in an HOA housing addition with its own elementary school for just $88,000.  This home was less than 10 years old!! 

People think of Hud homes as wrecks and in blighted communities, but the recession left millions of homes out there who were lost to foreclosure through job loss, not through deadbeat abandonment.  Oh, I've seen some that the owners tore up before moving because they were angry.  One had kicked in a wall in every single room, poured black oil down the stairs, and removed all the closet doors and the electrical box.  But this is not the norm.  Most are dirty, possibly filled with junk they left behind as they hurridly left before being locked out, but some are very nice, clean and livable, as both of my children's homes were. 

What type of repairs might be made.  Speaking of my kids, one had to put in new light fixtures, a dishwasher, a vanity, sink and 3 mirrors and faucets, and a disposal.  That was it!!  The other had to have the air conditioner worked on, a piece of siding changed out, and something in the bathroom, a faucet I believe, fixed, and two places in the kitchen the drywall had to be repaired.  That was all.  Neither had structural problems or major plumbing issues.  Both did have to replace air conditioner motors within the first year, but if they had listened to mama and gotten the home warranty when they purchased the house, then that would have been a $60 repair.  But home warranties are another issue and we can cover them another day.

In the end, HUD homes are a way of getting a deal on a house, but be prepared to lose a few.  Meaning the good ones get lots of bids.  You need to be prepared to bid at least the asking price, cash is better than a loan if possible, as HUD doesn't have to wait 30 days to close then, and be prepared the have your loan prequalified before making a bid.  Don't be too disappointed if on the day of the opening of the bid you didn't get it.  Both of my children did NOT get theirs upon opening.  My son was sent a message he did not get it but did he want to be in back-up position.  I, as his realtor, responded yes.  5 days later, on Friday we got an email that he was now in first place.  Obviously the winner had either decided not to buy, found something else, or didn't meet the 48 hour contract deadline.  When you are the lucky accepted bidder, you have 48 hours (2 business days) to get your contract paperwork all in.  You have to fedex it for overnight delivery.  If they do not get it in time, they are heartless and go to the back-up offer. 

My daughter bid time and time again and kept being over bid.  On the house she finally got, she was not the lucky winner, but took the back-up position and in a few days was notified she was the winner.  So remember to be patient.  Even if you don't win on the opening, take that back-up position and you may still end up with the house in a few days.

There are many other things to discuss about the HUD procedure, but you can find answers to the most asked questions at Hudhomestore.com.  One thing I DO like as a realtor, a realtor must represent you and put your bid in.  You pay their commission, not hud, but it can be within your loan.  You may not like this, but it will be a lot easier for you having someone do all the paperwork who is experienced at it, keeping up with all the deadlines, and protecting your interests.  And for me, the realtor, it might just keep me in business for another year or so.

A Little About A Lot of Things.

Interest rates are staying low but inching...no millimetering upward.  30 year conventional is 3.375%.

I learned from my kids that you can't refinance unless you have paid down 5% of your original note; doesn't matter if you had a good equity.  Their house is about $145,000 value, and they paid $100,000 in foreclosure sale for it in July.  We figure they've paid it down to about $97,000 as they just got a 15 year note.  So they have to pay down $2,000 more in principal before they can refinance at a lower interest rate and get a home equity loan for fixing a few things they want to do.  Not bad for 23 year old kids, huh!!  So proud of them.

I listed a huge 4400+ home this week.  Originally 6 bedrooms, now 5, as they took down a wall and opened up a large living/dining area.  It has 2 living areas downstairs and a huge sunporch which would be great for a pool table or hot tub.  It has 3 bedrooms downstairs and 2 baths, and upstairs another full house of 2 br, office, landing that is huge enough for another office, large open la/dining and another kitchen.  Perfect home for 2 families, and that's what lived here.  Two families, and one was a quadriplegic so downstairs are the mechanism for lifting a disabled person and a shower that's about 5 x 5 to accomodate a wheelchair.  This house has a large covered patio, wheelchair accessible, and two extra lots; one on each side of the house.  Build a shop and a pool, or another house on the north, as that lot is about 88 x 115.  All for $174,000, as we need to sell it fast before it is foreclosed due to medical bills.  Aren't banks totally without heart!!  These people tried to make payments and they wouldn't take partial payments and said they wouldn't talk about refinancing until they were 3 months in arrears, so they paid medical bills with their money for 3 months and then tried to refinance and the bank said  no, because now they had no closing cost money.  This is THE national bank we all hear about not having a heart, and I'm afraid it is so, even though my mortgage is with them and I bank there.  I may change all the banking part to a local bank after this. 

I want to share a devotion and comments I posted today on facebook and on my momsdementia.com blog where I cover things about my mom's Vascular Dementia.  This is about God and his love for us.  So if you are not interested in hearing about how God wants to hear from you, then stop reading right NOW.

"Sue Lawrence gave me a devotion book that I am really enjoying. Today's was about Psalm 145:18. "The Lord is nigh unto all them who call upon him." The writer said he had just finished reading a book explaining prayer, and how the Lord is always waiting to hear from us, longing to hear from us, ready to listen to us. He was cynical and thought, "Oh, yay, the creator of the universe wants to hear from a nobody like me. That day was a particularly busy day for him at work, lots of deadlines and projects. The phone interrupted his schedule and he picked up the phone and answered in a tone that said, "Get on with it and let me get back to work." Then he heard his son's voice . Attitude changed. His son was on his way to work in his car and was telling his dad about his newest project, about his friends, etc. They visited for over 10 minutes and when the phone call ended, the dad realized that he had been longing to hear from his son, just as God longs for us, his children, to call him and visit, and spend time talking. He knew then what the verse meant, and he understood more about prayer.

I've had the busiest 5 days in real estate this past week I've ever had. One day I didn't even eat until 6 p.m. That day my son DJ and his wife offered to go with me to eat as Jerry was already at church, and I so enjoyed the 'down time' to just listen to them and tell them about my life. It was special. Yesterday I decided I was NOT going to miss my pickleball so I quit at 4 and went to play for 2 hours. Just before we started a new game, the phone rang for the second time, I jerked it to my ear and said "This is Judy, what can I do for you." in a tone that was not very welcoming. My son, Jeff, answered, "Well, for one thing, don't yell at me." Oops. Then he invited Jerry and me to go bowling, which later was cancelled and changed to supper at Mr Gattis. Jerry knows I don't ever put my kids off if they want to spend time with me. So we went, and had the added surprise of having Cierra, Brandon, Charli, and Derek all together for a meal and visit. I so enjoyed listening to Jeff's exercise stories, DJ's comments about bump, set, spike being the way to play volleyball, but sometimes you see an opening and it's right to just hit it on over; to watch Cierra care for and love on that baby girl, Charli, and to see Brandon being his usual -in his words - not cute but handsome self. To hear Jerry share the story of his near fall at PD Canyon, and just share in everyone's lives. So this devotion today was right on for me. God too wants those kind of phone calls, those special sharing times with his children. Have you given him a call today? He's waiting . . and hoping . . ready to listen as long as you want."

DISTRESSED REAL ESTATE SALES

Distressed Properties

Distressed homes, which include foreclosures and short sales, in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 24 percent of the September total, up from 22 percent in the prior month, today’s report showed.
All-cash transactions accounted for 28 percent of last month’s sales, and investors, the majority of who are all-cash buyers, accounted for 18 percent.
Private-equity firms such as Colony Capital LLC and Blackstone Group LP, have converged on Phoenix, Atlanta and other distressed areas in search of low-priced properties to buy and rent out, helping to stabilize the markets. These types of investors have raised as much as $8 billion to buy as many as 80,000 single-family homes to manage as rentals, according to a Sept. 21 report by Keefe Bruyette & Woods Inc.
American households may also be drawn into the market as a falling jobless rate helps bolster confidence. Unemployment dropped to 7.8 percent in September, the lowest since PresidentBarack Obama took office in January 2009. The Bloomberg Consumer Comfort Index last week climbed to a six-month high, and a similar measure from Thomson Reuters/University of Michigan jumped this month to a five-year high.

Foreclosures fall to 5-year low

By Les Christie @CNNMoneyOctober 11, 2012: 2:21 AM ET

• I'M REPRINTING THIS ARTICLE BUT I'M NOT AS EXCITED AS THE AUTHOR.  I FEEL ITS ARTIFICIAL FALL BEFORE THE ELECTION.  WE'VE BEEN TOLD A SHADOW INVENTORY IS OUT THERE WAITING UNTIL AFTER THE ELECTION TO COME ON THE MARKET.

NEW YORK (CNNMoney) -- The wave of foreclosures hitting the nation's housing market has been much less severe than anticipated, with foreclosure filings at their lowest level in five years last month, according to a report out Thursday.
Foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- were reported on 180,427 properties in September, a 7% decline from August and down more than 16% from a year earlier, according to a report released Thursday by RealtyTrac, an online marketer of foreclosed properties. That's the lowest number of filings since September 2007.

"[Foreclosures are] making little noise in the housing market -- at least on a national level," said Daren Blomquist, RealtyTrac's vice president.
Blomquist had been waiting for another wave of foreclosures to hit the housing market ever since the $25 billion mortgage settlement was reached in April.
Lenders put the brakes on many foreclosures as their procedures were put under the microscope after the robo-signing scandal came to light in September 2010. The mortgage settlement had cleared the way for them to proceed again by laying out clear guidelines on how they could pursue borrowers who had missed payments and clear their backlogs of delinquent loans.
As a result, Blomquist and other industry experts expected the market to be flooded with repossessions. "That's not the way it's playing out," he said. "It has been a much more managed flow."
Related: Obama's housing scorecard
The decline in foreclosures has been especially steep lately in states like California and Texas, in which foreclosures do not go through the courts. In these "non-judicial" states, foreclosures were handled relatively quickly once the banks started to process foreclosures again. In judicial states where the courts are involved, like Florida, Illinois, New York and New Jersey, the banks have been careful to make sure all their paperwork is complete and accurate which has slowed the process significantly.

Part of the reason for the overall improvement is that the government's and the banks' efforts to prevent homeowners from falling into foreclosure have taken hold. The government sponsored Home Affordable Modification Program has helped more than a million borrowers obtain more affordable mortgages.
Banks too, are looking for ways to keep delinquent borrowers from falling into foreclosure, opting to either refinance their loans or agreeing to more short sales where the lender agrees to a sales price that is less than what is owed on the mortgage. Lenders prefer short sales over foreclosures because they lose less money on the transactions and they involve fewer legal costs and other expenses.
Related: Economists: Housing recovery finally here
Record low mortgage rates have also helped struggling borrowers hold onto their homes, said Mike Larson, an analyst with Weiss Research. Many borrowers have refinanced their mortgages to lower rates and sharply reduced their payments, helping them to avoid default, he said. The improving economy has also meant fewer job losses.
"That takes some pressure off," said Larson. "Fewer people are falling behind on their loans."
As a result, the number of distressed properties that threaten to come onto the market is starting to shrink and Blomquist expects fewer bank repossessions going forward. Foreclosure starts, homes in the first stage of the foreclosure process, were down 15% in September compared with 12 months earlier.
"Foreclosures are still a headache, but they're less of a headache than they were," added Larson.