Buying a HUD House

Taken from the Housing and Urban Development Website, this article answers many of your HUD questions.

What is a HUD Home?

A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

The following information is provided to as an introduction to the process.

Who Can Buy a HUD Home?

Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma, you may be eligible to purchase a HUD Home at a discounted price.

How Are HUD Homes Sold?

All properties available for purchase by the public are offered for sale at Internet listing sites maintained by management companies under contract to HUD. Any real estate broker registered with HUD may submit an offer and contract to purchase on your behalf. HUD pays the real estate broker's commission, if included in the contract.

HUD Homes are offered for sale at fair market value, based on a recent appraisal. Generally, HUD Homes are sold in what is known as an "Offer Period," during which a potential buyer's offer must be made. At the end of the Offer Period, all offers are opened and the bid providing the highest acceptable net return to HUD may then be accepted. Following the initial "Offer Period" homes remaining unsold are offered on an "extended" basis which means offers may be submitted any business day. If a bid on one of these homes is acceptable, the broker will usually be notified within 48 hours of HUD's acceptance of the offer.

Should I Get a Home Inspection?

HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase.

If you are interested in acquiring a HUD Home that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. More information about FHA's 203(k) Rehabilitation Loan Program in the next Blog.

What About Financing?

HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender. If you have the necessary available cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. While HUD does not provide direct financing for the purchase of a HUD Home, it may be possible for you to qualify for an FHA-insured mortgage to finance the purchase.

Where Can I Learn About Available HUD Properties?

Any single family property acquired by HUD FHA will display a sign identifying who is managing the property before it is listed for sale. During this time the property is appraised, title issues are resolved, if necessary, and a determination is made about the property's eligibility for HUD's discount sales programs. Listings are posted on the Internet and the Multiple Listing Service.

Does FHA Offer Any Special Discount Sales Programs?

FHA REO properties located in designated Revitalization Areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. More about these Good Neighbor Initiatives in a future Blog.

HUD Assistance for Disaster Areas

If you are an evacuee displaced by Hurricane Katrina, Rita or Wilma, you may be eligible to acquire a HUD Home at a discount. Click here for additional information about HUD assistance to Gulf Coast communities affected by Hurricane Gustav. Click here to learn more about disaster assistance provided through HUD's Office of Disaster Recovery.

Staying close to home this Staycation

Going someplace close by-for me- Cleveland, Ohio of all places- made me realize something important- you don't have to travel far to have a good time and find surprises!! We stayed at the Embassy Suites in Rockside right outside of Cleveland. It was gorgeous! AND our $60 divided by 3 people got us a happy hour from 5-7 and a breakfast with 2 cooks fixing omelets anyway you want them and included bacon, sausage, cereal, juices, coffee, toast, waffles, muffins, fresh fruit, and OH MY...and all free with the stay. What more could one want?...oh, did I mention a pool and hot tub that were clean and reasonably warm as well as a pool table? We also made a trip to Edgewater Beach that turned out to be a huge surprise to us because it was clean, canopied by trees for shade, and a wonderful breeze and a large expanse of sand to curl your toes in- how delightful. So, that along with some shopping and a trip to the Flats..I began to think about other places close by when I ran across this article. It seemed to fit so here it is. I think it's worth a look. I hope you think so, too. If you decide to stay at home -or close to home..this article will help you make the most of it and really enjoy yourself!

Isn't it amazing how we go out of town and really take a place by storm? We visit museums, dance all night, and snag a resy at the local hot spot. Yet when we’re at home, we stick to our usual routines, hitting-up our old standbys or staying on the couch. It's time to make the most of where you live. In honor of the always popular summer staycation, we've got a dozen ideas to turn you into a tourist in your own town.

1. List your favorite vacation activities

Do you like to see a local sports team? Go shopping? Sit and people watch at a sidewalk cafe? Let what you love to do on vacation inform how you're going to explore your own home turf. Bonus points: maybe what you love to do on vacation should find its way into your life more often, just for the fun of it.

**Note from Carol: like water? Try Buckeye Lake! Do you like to travel back in time a little? Try the Homestead or Dresden, Ohio. Like Pottery? Ohio Pottery! Like Antiquing? There are many places between here and Cincinnati!Check them out!!

2. Check out a local guide book

You've got the inside scoop, no doubt, but a travel guide focusing on your town might offer up suggestions you've overlooked, forgotten, or didn't even know about.

3. Get off your personal beaten path

The reason travel is so exciting is because we're extra aware of our surroundings. We're looking at new things and observing the out-of-the-ordinary. Replicate this feeling in your own life by spending the afternoon in a different part of town, taking different routes to and from work, or riding your bike in a new park. Keep your eyes wide open to get that sense of wonder and exploration.

4. Let your taste buds guide you

There might be a fancy IT Restaurant in your town you think of as being only for tourists or a place people rave about that's inconvenient for you to get to. You know those places you say you'll try Someday? Give them a try! Or go to a new-to-you ethnic restaurant to get a foreign experience without a visa.

5. Shop local

Imagine that you're creating your own local shopping guide, and check out the shopping experiences that make your place unique. That could mean the flea market you've never visited, the best farmer's markets, or the posh local boutiques. No pressure to buy! Just explore.

6. Travel back in time

Almost every place has historic sites that townies assume are a snooze. But you never know how visiting a battleground, restored home, or recreated village will inform your sense of life in the here and now.

NOTE:Try Amish Country!

7. Prime yourself for adventure

When we're in a new place we often get up early, raring to go. Bring this same sense of adventure to your hometown. Get out of the house early in the day with the intention of staying out and about and seeing as much as you can.

8. Take a guided tour

Hop on a boat or bus tour, or fall in line on a walking tour. Sometimes these are themed (twilight ghost stories and literary tours, anyone?), but even the straight-up factual variety can offer a new perspective on your place.

9. Hit the museums and churches

We almost always do this when we're out of town––some kind of universal traveler's law––but rarely at home. Step into a cavernous space in your town to look at art or marvel at arches.

10. People watch

Grab a sidewalk table and a glass of something delicious and sit. For at least an hour, take the time to just observe your surroundings and what street style defines your town.

11. Splurge!

When we're on vacation we treat ourselves, and a staycation should be no exception. Look at it this way: you're already saving on hotels. Dress up and visit that posh restaurant, plan a night of dancing, and spring for tickets to the ballet, opera, or local theater.

12. Use your imagination

Don't just go through the motions of being a tourist in your own town; actually pretend that you are new in town. We tend to act differently when we're somewhere new. We're wide-eyed, open-minded, carefree, and curious. Try to be open to the adventure that crosses your path and go with the flow.

Bonus: Take pictures! One of the reasons we have such great memories of our vacations is because we document them! Take pictures in your town of everything that delights you and of you and your honey in front of a sunset.

If you thinking of selling and live in an area that requires flood insurance..read this!

Once again, Congress left town without reauthorizing the National Flood Insurance Program (NFIP) and the Section 502 Rural Housing programs. The NFIP is now expired. The Section 502 Rural Housing program has exhausted its funding and lenders have stopped accepting applications.

Until Congress extends NFIP, no new or renewal flood policies can be issued. Without the flood insurance coverage provided by NFIP, thousands of residential and commercial transactions are on hold.

Congress has also abandoned the Section 502 Rural Housing Program. The housing program provides zero-downpayment mortgages to eligible families in rural area of every state. Many of these families signed contracts before April 30th and plan to utilize the homebuyer tax credit. If this program is not restored soon, they will lose their chance.

Regardless of your location, rebuilding our markets in every corner of America is in every REALTOR®'s interest. The REALTOR Party must speak with one voice to urge Congress to renew both NFIP and the Rural Housing 502 program today.

Please contact Congress today.

Posted: 6/2/2010
Columbus Board of REALTORS®

22% of listings currently on the market in the United States as of June 1, 2010 experienced at least one price reduction which is a slight decrease from June..

I realize this is not about Columbus directly...here we have seen any where from 5% to 30% drops depending on the community but I thought you might be interested to see we are all in this together!

RISMEDIA, July 12, 2010—Trulia.com, smart real estate search to help you make better decisions, recently announced that 22% of listings currently on the market in the United States as of June 1, 2010 experienced at least one price reduction, which is a slight decrease from 23.6% in June 2009. The total dollar amount slashed from home prices was $26.7 billion and the average discount for price-reduced homes continued to hold at 10% off of the original listing price.

“Sellers are optimistic heading into the summer season because of the strong sales figures from the spring. The spring sales were fueled by the expiration of the tax credit and my concern is that this heavy activity is providing sellers with a false state of optimism,” said Pete Flint, co-founder and CEO of Trulia. “We are already starting to see rising inventory levels and I believe this will be the story of the summer. For the unforeseen future, buyers will continue to have the negotiating power and I expect we will see sellers get aggressive via price cuts throughout the summer.”

Biggest Winners and Losers

Cities in the Western U.S. experienced the largest decreases in price reductions compared to the previous year. Las Vegas, NV led the way with a 67% decrease and six California cities saw a decrease in price reductions of 24% or more, including Oakland, San Jose, Los Angeles, Sacramento, San Francisco and San Diego.

On the other end of the spectrum, cities in the Midwest and South experienced some of the largest percentage increases in price reductions in year-over-year comparison. Kansas City, MO jumped 55% from June 2009 to June 2010, while other cities such as Arlington, TX, Cleveland, OH, Louisville, KY and Houston, TX all saw increases in price reductions of 30% or more.

A Class of Its Own

For the second month in a row, Minneapolis, MN saw 40% of its listings reduced in price. No other city has reached this mark since Trulia started tracking home price reductions in April 2009. With an average discount for price-reduced homes at 8%, the city’s total dollar amount slashed from home prices was $26.4 million.

Luxury Market Holds Steady Post Tax Credit Incentive

Price reduction levels for luxury homes (those listed at $2 million and above) continue to hold steady with 21% of homes seeing a price reduction and with an average reduction of 14%. Homes in this category account for the less than 2% of total inventory but account for almost 25% of total dollars slashed off all the homes for sale.

For more information, visit www.trulia.com.

More statistics-these from across the US

Yes, I like statistics. I don't know why...I just do..I think they are interesting. I see things and wonder why..I don't always think about it being a 'regional' thing..I find it fascinating, though

Regional Differences in Completed Single-Family Homes
The Census Bureau’s data on characteristics of completed single-family homes also showed regional differences.

In 1973, less than half of all new single-family homes completed had air conditioning; in 2009, 88% were air conditioned nationwide. Regionally, the proportion ranged from a low of 69% in the West to a high of 99% in the South. The Northeast and Midwest were at 75% and 90%, respectively.

Nationwide, 62% of new single-family homes completed in 2009 had two-car garages, and 17% had garages for three or more cars. However, there were clear regional differences. Three-car garages were found in only about 11% of homes in the Northeast and the South. In the Midwest, 30% of all homes had three-car garages, and in the West, 26%.

Regional differences were especially pronounced in the selection of exterior wall material. Nationwide, 34% of all single-family homes completed in 2009 had vinyl siding, 23% were brick, 19% were stucco and 13% had fiber cement siding.

Vinyl siding predominates in the Northeast, where it accounted for 74% of the market; wood was a distant second with a 12% market share. In the Midwest, vinyl siding accounted for 62% of the market, while wood and brick were at 15% and 11%, respectively.

Brick was the leader in the South, where it was found in 40% of new single-family homes. Twenty-eight percent of new homes in the South had vinyl siding and 13% had stucco.

The Census Bureau began reporting statistics on fiber cement siding, which is relatively new to the market, in 2005. It already accounts for 24% of the market in the West. Stucco and wood account for 52% and 15% of the market, respectively, in that region.

For more information, visit www.nahb.org.

**Note: these articles are from Hilary Marhover of Real Living Mortgage who specializes in 203K loans as well as other loans and she puts out a news letter every month and in this months article were these stats. Thanks, Hilary!

Home Size Continues to Decline

If these statistic continue to be true, it's going to be interesting to see what happens to the Large Home market.. 100 square feet doesn't seem like much of a change but it signals a the reverse of the "larger is better" thinking..do you suppose it is because of maintenance or taxes? cost? What do you think? Or is it just a temporary change? I would love to know your thoughts...

RISMEDIA, July 12, 2010—The size of new single-family homes completed declined last year, dropping to a nationwide average of 2,438 square feet, according to detailed information about the characteristics of new homes completed in 2009 that was released recently by the Census Bureau.

After increasing continually for nearly three decades, the average size of single-family homes completed in the United States peaked at 2,521 square feet in 2007. It was essentially flat in 2008, then dropped in 2009, so that new single-family homes were almost 100 square feet smaller in 2009 than in 2007.

“We also saw a decline in the size of new homes when the economy lapsed into recession in the early 1980s,” said NAHB Chief Economist David Crowe. “The decline of the early 1980s turned out to be temporary, but this time the decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home. Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”

Crowe also pointed out that the average square footage of new single-family homes completed is only one measure of new home size. “The Census Bureau also reports average square footage in a quarterly release based on starts rather than completions, which is sometimes useful when market conditions are changing rapidly,” he said.

In keeping with their slightly smaller size, new single-family homes completed in 2009 had fewer bedrooms than previously. After increasing for almost 20 years, the proportion of single-family homes with four bedrooms or more topped out at 39% in 2005; it was 34% last year. The proportion of single-family homes with three bedrooms increased from 49% to 53% between 2005 and 2009.

New single-family homes completed last year also had fewer bathrooms than previously. The proportion of homes with three or more bathrooms was 24% last year, a decline from the peak of 28% in both 2007 and 2008. The percentage of single-family homes with two bathrooms increased from 35 to 37 last year, and the percentage with 2½ bathrooms was at 31% for the third consecutive year. The proportion of single-family homes with 1 or 1½ bathrooms has been below 10% for more than a decade.

In 1973, the first year for which the Census Bureau reports characteristics of single-family homes completed, most new single-family homes–67%–had only one story. Twenty-three percent had two or more stories, and 10% were split levels.

The proportion of one-story homes declined steadily for more than three decades, dropping to a low of 43% in 2006 and 2007. At the same time, the proportion of single-family homes with two or more stories increased, rising from 23% in 1973 to a high of 57% in 2006 (split level homes currently account for less than one percent of all single-family homes). Since 2006 the trends have been reversed, as the share of single-family homes with one-story increased to 47% last year, while the share with two or more stories dropped to 53%.

Some answers to the question: "what do I have to disclose when I sell... "

*this article may not answers all your questions, but if you find you have more...call me and I will get the answer for you. By law, real estate agents cannot fill out any sellers' home disclosures unless the agent is the seller or a party to the transaction. However, that doesn't stop some naive agents from completing disclosures on behalf of their clients and opening themselves up for potential lawsuits. After all, it's mostly lawsuits that have prompted the creation of many of the disclosure forms agents ask sellers to complete.

Federal Disclosures

Every state has its own laws regarding disclosures, so the forms will vary depending on where you live.

A federal disclosure such as Lead-Based Paint is required for all transactions if the home was built before 1978. The disclosure also gives the buyer 10-days to conduct inspections for lead-based paint, unless that time period contingency is waived in writing. It's considered good practice, however, to give every buyer, regardless of where she lives and regardless of the type of property she is under contract to purchase, the disclosure regarding lead-based paint. The potential for a lawsuit is too great to do otherwise. Besides, even though it's prohibited, there are still places where lead paint is sold.

Material Facts

Material Facts are commonly referred to as anything that would affect the buyer's decision to purchase or the price and terms the buyer offers. In other words, if you have knowledge about a defect, it should be disclosed. In California, sellers are to notify buyers if a death has occurred on the property within the last 3 years. Some buyers are creeped out by knowledge that a seller died in the house.

A seller once asked me if she should tell the buyer that her husband died in their bedroom five years ago. Although the law doesn't require it, because the death occurred outside of the three-year window and because the buyer did not ask about it, I suggested she disclose this to the buyers, and she did. Moreover, if she had chosen to withhold this information from the buyer, I would have had to disclose it because now I had knowledge of a material fact.

Causes of Death

Many home buyers are fine with news of a death occurring in the house as long as it wasn't violent or gruesome. There are also buyers who believe homes are haunted by former occupants who died in the house. If you have specific details, you might want to consider sharing it with the buyer unless it pertains to AIDS. Check with your local laws and a real estate lawyer for advice about deaths surrounding AIDS because in some states, AIDS falls into a protected class and could be subject to discrimination claims as well. There are times you're darned if you do and darned if you don't.

External Disclosures

Some states require disclosures about items that affect or could affect the property such as:

•

Earthquakes

•

Natural Hazards

•

Zoning Changes

•

Flood Zones

•

Fire Hazards

•

Noise Pollution

•

Ground Pollution

•

Air Pollution, among others.

Due to the volume of lawsuits, the California Association of Realtors publishes a number of disclosure forms for buyers, some of which tell a buyer that if she purchases a home on a golf course, errant golf balls might break her windows. Why? Because a homeowner who bought on a golf course once sued for non-disclosure when golf balls smashed her picture window. (note from Carol: We don't have the earthquake disclosure but we do have a disclosure for coastal areas, flood and historical areas)

Do You Need to Disclose Every Home Repair?

If I were personally disclosing the condition of my own home to a buyer, I would not use the term "repair," because it could be deemed to imply that the defect was permanently corrected. But if I had called a plumber to fix a leak under the sink, I would disclose:

The pipes once leaked. I paid ABC plumbers $175 to fix the leak.The pipes have not leaked since.

Are the pipes good as new? I don't know. Probably not. I'm not going to guarantee it, however. In lots of cases, home buyers feel a sense of relief if they know certain things have been repaired. It brings a security to buyers if they know a seller has:

•

Replaced a roof

•

Upgraded electrical & plumbing

•

Bolted the foundation (note from Carol: not sure what this means unless they are referring to beams or watter proofing areas.

Foundation Problems

In areas with basements, this is a huge issue, as are problems surrounding wet basements. But so are defective slabs. I represented a seller whose newer wood floor showed discoloration in spots. Was it due to moisture? The sellers didn't know. We simply removed the rugs, disclosed the discoloration to the buyer and offered a $5,000 credit for new floors, which the buyers accepted without further discussion or fuss. (note from Carol: fixing a basement wall with beams or putting in a water proofing system in the basement is also good to know from the Buyers perspective because you corrected a problem.)

What About Rumors?

Generally speaking, unless you will violate a state or local law by disclosing, if you have knowledge of a defect or material fact, then disclose it. If a neighbor repeated a rumor, and you have not verified nor disproved the rumor, you might want to consider telling the buyer about the rumor. Follow the Golden Rule. If you would like to know, your buyer probably does as well. Typically, buyers aren't upset by receipt of negative information. They get upset and call a lawyer when they feel they have been duped, deceived or lied to.

Home Disclosures and Material Facts

What Should Sellers Disclose to Home Buyers?

By Elizabeth Weintraub, About.com Guide

For everyone who is curious about housing design-the why's and how's...this is for you

I'm always curious. About a lot of things. I ran across this article that I thought was very interesting and I hope you will find it so as well. Of course, it's about houses. Housing. How and why's of the housing after WWII and why you see the houses you do- how it came about. This isn't the entire article but it's long and I thought what was here was pretty good on it's own.

The Depression made clear in the minds of policy-
makers in the United States the need both to stimulate the economy and to create a new economic order geared towards stability.

Turning a 'nation of renters' into a 'nation of owners' was seen as a way of extending the possession of stable assets to the majority of the population. In the United States, Franklin D. Roosevelt introduced a federal initiative to stimulate the private housing market.

The federal government passed the National Housing Act which guaranteed low-interest mortgages of up to 80 percent of the value of a home.

The National Housing Act was supervised by the specially created Federal Housing Authority (FHA); the program met with limited success during the Depression, when capital was scarce, and it ground to a halt during the war due to the appropriation of all building materials for the war effort. As a consequence, the post-war period was characterized by inflated expectations and a boom in the demand for housing.

For the consumer, the legacy of depressed hopes, wartime frugality, and self-denial was replaced by the anticipation of plentiful, new, ideal family homes. However, demand so far exceeded supply that potential buyers experienced long delays in obtaining their
houses.

In 1944, the Veterans Administration had created the Veterans' Mortgage Guarantee Program later known as the GI's Bill of Rights. Administered by the FHA, this program enabled veterans to borrow the entire appraised value of an approved house without a down-payment. The
significance of the GI's Bill of Rights to the housing industry was directly related to the guidelines set for qualified housing: the program limited the price range of the affordable post-war family house to between $6,000 and $8,000, and the range in size to between 800 and 2,000 square feet. This price restriction drove architects and builders to experiment with
cost-reduction strategies.

The FHA also mandated and controlled the style and form of subsidized housing: builders had to conform to set government guidelines if their potential customers were to finance their homes under the program. While the result of such control has been characterized as conservatively styled houses, the following analysis will make clear that the post-war period saw fundamental changes in both the form and the construction of the basic dwelling.

During the post-war euphoria, both consumer demand and expectations ran high. People wanted the latest in technology, planning, building, and labor-saving devices, within established designs. Consequently, the post-war housing industry was forced to deal with two underlying realities: in order to keep costs down, building could no longer be undertaken using the designs and methods then employed, and savings in small-house construction would come not from major elements but from meticulous attention to innumerable details. Due to the limitations in both price and size, architects in the field were forced to redirect their practices away from ornate, decorative, and stylish dream houses; post-war housing required functional, practical, and economical solutions which were appropriate to family homes.

Economics, material shortages, technological advances, and changes in consumer expectations were all reflected in the design alterations to the typical, low-cost home in the 1945-59 period. The pre-war family home was, typically, a two-storey structure with a pitched roof and a basement. Such a structure was out of the question under the FHA guidelines: it was excessive in both size and cost. Since the FHA was also concerned with the market acceptance and resale value of the homes, the agency promoted the adaptation of publicly accepted models of housing, reduced in dimensions in order to fit the restrictions of size and price. One example of an already compact traditional style that was scaled down and redesigned for use as a prototype for post-war development was the Cape Cod Cottage, which
had become the popular symbol of 'home' in the1930s and 1940s. Built in 1949 and designed by Samuel Glaser, the revitalized Cape Cod Cottage could be purchased for under $10,000. The modernization of the cottage introduced higher ceilings and added foundations, to produce a small separate kitchen, two bedrooms, a living room, and a spacious attic which could be converted to bedrooms at a later date.

The Evolution of Design Characteristics During the Post-Second World War
Housing Boom: The US Experience

A partial Journal article by Avi Friedman; Journal of Design History, Vol. 8, 1995