|
Info on Contract Extensions and Termite Letters
|
|
Posted By - Terri Kilpatrick - 01/27/2012
|
|
I just wanted to take a minute and touch base about a few changes that have not been publicized, but that we have experienced ourselves regarding contract extensions and termite letters.
For the most part, the contract extension process remains unchanged. Extensions for a purchase price of $25,000 or less are $150.00 ($10.00 per day, issued in 15 day increments), purchase prices of $25,001 - $50,000 are $225.00 ($15.00 per day, issued in 15 day increments), and purchase prices over $50,000 are $375.00 ($25.00 per day, issued in 15 day increments). Extension request forms and funds, which must be a cashier's check or money order are still made payable to and sent to HUD's designated closing agent for the region the property is located in. For Columbus, Georgia and the surrounding areas in Georgia, the designated closing agent is O'Brien Law Firm in LaGrange, Georgia. Lee and Russell Counties in Alabama are serviced by Redmond Law Group. Click here for a link to the list of HUD's designated closing agents for our area.
The major change that we have noticed regarding contract extensions is that now, all contract extension requests MUST be accompanied by funds. Previously, the extension fee was typically waived for the first extension request for owner-occupant purchasers. The fee is still being waived in some cases, in a roundabout way. Although funds must be sent, they are refunded to the purchaser at closing should HUD decide to waive the fee. It has been our experience that even if there is a delay due to title issues at no fault of the purchaser, funds must still be sent along with the extension request and will be reunded at closing.
The change regarding termite letters came as quite a bit of a shock to us, because we were not notified of a procedure change, and our purchaser ended up having to extend because of the confusion. The rule is still that HUD will issue a termite letter for any HUD properties that are being purchased with FHA financing. Previously, it was the responsibility of the selling agent to request the termite letter per the instructions included in the executed contract package. However, when we requested a termite letter last week on behalf of our purchaser, we were told that letters cannot be requested by agents and will not be delivered to agents. It is now the responsibility of the LENDER to request the termite letter. So, Agents and Buyers, please be aware of this change and make sure that your lender requests the termite letter from HUD no later than 7 days prior to closing to prevent any costly delays.
|
|
|
Changes to the Broker Bonus Incentives
|
|
Posted By - Terri Kilpatrick - 12/25/2011
|
|
|
HUD has recently changed the structure of its Broker Bonus Incentives. The information below is provided courtesy of www.HudPemco.com.
"A broker bonus is being offered in eight market areas: Georgia, Florida, Mississippi, Alabama, Illinois, Indiana, Tennessee, and Kentucky. The following conditions must be met in order for the selling broker to receive the applicable broker bonus.
- The preliminary bid must be submitted on or after December 1, 2011.
- A loan commitment letter from a lending institution must be received with the signed Sales Contract if the purchase is to be mortgaged; or, if paying cash, a certification letter must be received from a financial institution stating sufficient funds are available to complete the purchase.
- The words “Broker Bonus” must be written or typed at the top of the signed Sales Contract.
- The selling broker must complete and sign the HUD Notification regarding the broker bonus sales initiative.
- For all properties that close up to 34 days of contract acceptance, the selling broker will be eligible for a $600 bonus*.
- For all properties that close within 35 to 39 days of contract acceptance, the selling broker will be eligible for a $450 bonus*.
- For all properties that close within 40 to 43 days of contract acceptance, the selling broker will be eligible for a $300 bonus*.
- *Exclusions apply *Excludes: Hard-to-sell properties. The selling broker will not be eligible to receive a bonus for any property advertised by the Asset Manager (AM) as hard-to-sell."
|
|
|
There's No Place Like HOME For the Holidays!
|
|
Posted By - Terri Kilpatrick - 11/28/2011
|
|
As we are gearing up for a busy holiday season with all the shopping, decorations, and holiday cheer, the phrase "there's no place like home for the holidays" comes to mind. For me, being a Realtor and working so closely with HUD has given that phrase even more meaning. Many families dream of owning their own home, and have visions of spending the holiday season surrounded by family and friends in that home. Too often, those who are able to purchase their own home don't even know it, and just assume that they will not qualify or that they will not have the funds available to make that dream come true. With HUD offering the $100 down payment program on sales of HUD-Owned properties, the dream of home ownership CAN COME TRUE!
On a sale with a purchase price of $100,000, the down payment alone will normally be $3,500, not including closing costs! However, by purchasing a HUD home with a down payment of only $100, a great deal of the out-of-pocket expense (and stress!) is avoided.
I absolutely LOVE being able to help families find homes, especially during the holiday season. If you are interested in purchasing a home, please consider viewing the many HUD listings that are on the market today at www.HudHomeStore.com, and give us a shout if you're ready to make that dream become a reality for you and yours.
|
|
|
How Does HUD Determine The Bid Winner?
|
|
Posted By - Terri Kilpatrick - 10/27/2011
|
|
HUD does not determine the bid winner based on purchase price alone. There are a few things that factor into the equation, which I will cover in this blog.
The bid will be awarded to the bidder whose offer has the highest "Net To HUD", which is pretty much HUD's bottom line. The way the Net To HUD is calculated is:
Purchase Price
- Closing Costs Paid
- Listing Broker Commission
- Selling Broker Commission
NET TO HUD
For instance, if a property has a Purchase price of $100,000 and the purchaser is requesting that HUD pay the maximum closing costs (3%), here is how to calculate the Net To HUD:
$100,000 (Purchase Price)
- 3,000 (Closing Costs)
- 3,000 (Listing Broker Commission)
- 3,000 (Selling Broker Commission)
$91,000 (Net To HUD)
In the event that there is ever a tie between two bids, the system will randomly select one of the bids as the winner. For that reason, I always recommend that buyers either add or subtract a couple of dollars from either the Purchase Price or Closing Costs to help avoid being in a tie situation.
|
|
|
When It Comes To Deadlines, HUD Means Business!!!
|
|
Posted By - Terri Kilpatrick - 09/26/2011
|
|
This blog is mostly intended to be helpful to agents selling HUD homes - but buyers, feel free to read along as well! This information will be quite useful if you decide to purchase one of the thousands of HUD homes on the market today.
I cannot stress enough how important it is to meet all deadlines when you are selling a HUD home. Not meeting deadlines = HUD canceling your contract. In this blog, I will list some of the most common causes of HUD's deadlines not being met, and also give some pointers on how you can avoid having your contract terminated.
Please keep in mind that there are now THREE Asset Management Companies (Pemco, Ltd., Ofori & Associates, and HomeTelos) managing HUD properties in our area, instead of just one company. For that reason, it is very important that when you are looking at a property on www.HudHomeStore.com, that you click on the "Agent Info" tab. You will find information for not only the Listing Broker, but the Asset Management Company and the Field Service Manager as well.
The websites for the three Asset Management Companies are:
www.HudPemco.com
www.OforiREO.com
www.HomeTelosFirst.com
Once you are notified that your bid has been accepted, you must overnight the buyer-signed contract package to the correct asset manager within 48 hours. Failing to get the contract package to the correct Asset Manager within 48 hours will result in your bid being canceled. No exceptions. Once your bid is canceled, the property may automatically be awarded to the next-highest bidder if that bidder requested that their offer be held as a back-up and your buyer will lose out completely. If there were no back-up offers, the property will return to the market and you will get the opportunity to bid again.
The main reasons that we are seeing for the 48 hour timeline not being met are:
Agents not having the contract package completed at the time the bid is placed.
This is UNACCEPTABLE! You MUST have the contract package completed and signed in blue ink by the buyer and Broker prior to submitting the buyer's bid online. One of the forms in the package is an "Electronic Filing of 9548 Contract Addendum". By signing this form, the buyer is essentially giving you permission to submit the bid online on their behalf. To get the correct forms, you will need to go to the Asset Manager's website and download them. For example - If you send Pemco branded forms to Ofori, your bid will be canceled, and vice versa. Attention to detail is VERY important! Not having the correct forms prepared at the time of placing the bid is the #1 reason for the 48 hour deadline not being met.
Agents not sending the earnest money in with the contract package.
Earnest money must be in the form of a Cashier's Check, made out to HUD. The Cashier's Check must be overnighted to the Asset Manager along with the contract package.
Agents sending the contract packages to the Asset Manager by regular mail instead of overnighting them.
I recommend ALWAYS overnighting the contract packages, and also keeping your tracking number handy in case you need to track down a lost package or need to be able to prove that the Asset Management Company did receive the package by the deadline.
Agents sending contract packages to the incorrect addresses or incorrect Asset Management Company.
It is always a good idea to check the Asset Management Company's website and verify that their address has not recently changed. Also, double check to make sure that you are sending the package to the correct Asset Management Company! If you fail to get the contract package to the CORRECT Asset Management Company within 48 hours, your bid will be canceled.
That's it for now. Hope you found this information to be helpful, and please feel free to contact me with questions regarding the HUD sales process.
|
|
|
New Amendment Forms Are Making Changes Easier!!!!
|
|
Posted By - Terri Kilpatrick - 08/27/2011
|
|
|
HUD has recently rolled out some new amendment forms that are making life much easier for agents that need to make a minor change to the contract!
In the past, if you needed to add or delete a purchaser, correct the purchaser's name, correct the purchaser's address, correct the type of title vesting, or change the type of financing, you had to fill out a brand new HUD Sales Contract (Form 9548). Thanks to some handy new forms that have recently been approved, those changes are much easier.
The four new forms are:
Amendment to Change Finance Type of Escrow Amount
Amendment to Change Buyer's Name/Address/Vesting
Amendment to Add or Remove a Purchaser
Amendment to Add a Purchaser for Financial Reasons Only
These forms will still need to be signed by all parties and approved by the Asset Manager, however they may be EMAILED! Unlike the HUD Sales Contract, which HUD requires to be a blue-ink signed original, original forms are not required for these amendments, therefore making our lives MUCH easier.
Thank you HUD!!!!!
|
|
|
Can I Have A Home Inspection Done On A HUD Home:
|
|
Posted By - Terri Kilpatrick - 07/26/2011
|
|
We often get asked whether or not buyers can have home inspections done on HUD homes. The answer is - Yes! You can have a home inspection once you have a HUD home under contract. Home inspections are not only allowed, they are ENCOURAGED!!!
The process for arranging the home inspection is:
The first step is to receive your signed contract package back from the Asset Manager. The date the contract was signed by HUD is the date that the 15 day due diligence period begins.
With your contract package, there will be information regarding who is the Field Service Manager for that particular property, along with their contact information.
You will need to contact the Field Service Manager per the instructions given regarding getting utilities turned on, de-winterization of the property, and re-winterization of the property.
Once you have contacted the Field Service Manger and filled out the necessary forms, the utilities may be turned on in either the buyer's name, or the selling broker's name for 48 hours. The buyer will be responsible for any costs incurred regarding utilities, de-winterization, and re-winterization.
|
|
|
Will my HUD home be in move-in condition when I purchase it?
|
|
Posted By - Terri Kilpatrick - 02/02/2011
|
|
|
Maybe, maybe not. HUD homes can be found in all areas of town, in varying price ranges, and in varying conditions. Some homes are in excellent condition and can be financed with an FHA mortgage with no required repairs. Some others are in good condition, and can be financed with an FHA mortgage with $5,000 or less in FHA required repairs. The remainder of HUD homes on the market vary from needing simply cosmetic repairs that exceed $5,000 to needing structural repairs.
In any event, HUD will not make any repairs to the property. HUD uses codes to help you determine the general condition of a property at first glance. Right beside the words "FHA Financing" in the "Listing Information" for a property, there will be either an "I", an "IE", or a "UI.
If the property code is "I", that indicates that the appraiser has determined that the property can be financed FHA with no repairs. It is FHA insured, based on an FHA appraisal that has already been done. If a buyer purchases the property using FHA financing, no appraisal is needed.
If the property code is "IE", that indicates that the appraiser has determined that the property can be financed FHA with $5,000 or less in repairs, based on an FHA appraisal that has already been done. The FHA loan product that will be used for this type of property is the FHA 203b. The cost of the repairs will be added in to the mortgage, or escrowed. For escrow purposes, the amount added in will be 110% of the amount estimated by the appraiser. In other words, if the appraiser noted that the home needs $1,000 in repairs in order to be FHA insured, the amount added into the mortgage will be $1,100.
If the property code is "UI", that indicates that the property is uninsured. These properties will need to be cash sales, or financed by some method other than FHA or FHA 203b.
On a side note, but a very BIG side note - Any HUD home that has a property code of "I" or "IE" can be purchased using FHA Financing with only $100 Down instead of the traditional 3.5% down payment. This can save a ton on your out of pocket expenses. Please keep in mind that you will still be responsible for your initial Earnest Money Deposit.
|
|
|
Who Can Buy a HUD Home?
|
|
Posted By - Terri Kilpatrick - 01/18/2011
|
|
So, who gets to purchase all these great homes that are on the market?
ANYONE!!!!
Buyers fall into three categories:
1: Owner-Occupants
2: Investors
3: Government Agencies and HUD-Approved Non-Profit Organizations.
For this blog, we're going to concentrate on the requirements for Owner-Occupant and Investor buyers.
Owner-Occupant buyers are given priority during certain bidding cycles. What this means is - owner-occupant buyers will have a few days to view the home and make their bids before the investors get a chance.
Anyone who is putting in a bid as an owner-occupant must intend to occupy the house for at least one year. In addition, they cannot participate in any HUD sales for two years after the purchase.
Investors cannot bid until the Owner-Occupant period is over. There are no restrictions as to quantity as far as Investor purchasers are concerned. Owner-Occupants may still bid during the Investor period, but keep in mind that Investors MAY NOT bid during the Owner-Occupant period.
|
|
|
Think you know what a HUD home is? Doubt it!!!
|
|
Posted By - Terri Kilpatrick - 01/03/2011
|
|
|
Since this is a brand new blog for us, let's start at the very beginning. There are lots of myths out there as far as HUD homes are concerned, and we're here to bust the myths and spread the TRUTH!
I'm sure you've heard the phrase "HUD Home" before, right? Well, what exactly is a HUD Home? Which of the answers below is correct?
A: Homes in "bad" areas
B: Homes for Low-Income Families
C: Homes available on Section 8 or HAP
D: A one-to-four unit single-family residence acquired as the
result of a foreclosure on an FHA-insured mortgage
The correct answer is "D". A one-to-four unit single-family residence acquired as the result of a foreclosure on an FHA-insured mortgage. These homes vary in price, location and condition. Some homes are move-in ready, while others are not.
How are the prices for HUD homes determined?
Contrary to widely circulating rumors, these homes are not priced according to the loan balance. They are priced at market value, based on a recent appraisal.
That's all for now, but we will be posting more information every week, so check back to learn more about HUD homes!
|
|
|
|
