For most of us who have been in the business for the last few years the FHA foreclosures otherwise known as HUD Homes/Condos have been a fairly scarce item due to the low number of FHA mortgages issued during the mid 2000’s. During that time up until late 2010 the FHA system remained very much the same other than a change in the management of the system, the system itself stayed fairly similar. Now came the HudHomeStore.com and the multiple asset managers managing the properties. The bidding system which often worked to get homes sold that were overpriced with fairly consistent price drops worked to move inventory. Now each asset manager has deadlines to meet to get properties sold sometimes at the peril of the market and any common sense.
This whole blog comes from a condo I had a buyer for in New Albany. I had just spent the last 2 months trying to convince the buyer that most sellers in the area are under water and therefore are not able to take 25% less than list price except in extreme conditions. This held true as we made several offers and didnt get anywhere (even on bank owned properties). Then there was a HUD condo that was listed at $123,000, my client wanting to spend no more than $105,000 was looking to make offers in the 90k range and I told her that the banks normally reduce the price in steps rather than accept extremely low offers (HUD had always done this in the past). To my surprise the property dropped from $123k to $59k in one day! The market for this property is likely in the 90-100 range due to it being a foreclosure. Not only did they drop the price by that amount but did it on a Friday. HUD’s new rule is they do accept bids on the weekends (used to not be considered until Monday), so now there is a frenzy to buy this property, but if someone submits an acceptable bid on Friday it won’t be reviewed until Monday but there will be no notification given to other buyers. What this means to everyone else is that all the agents in the area get to show it, write offers, get buyers hopes up to find out on Monday that because their offer was submitted on Saturday or Sunday that it will not even be considered because someone submitted an offer on Friday that was just reviewed on Monday due to the weekend.
If you followed all of that you understand why I am so frustrated. Not only was the price drop a rediculous recommendation by the listing agent and an attempt to NOT work in the best interest of her seller, but the new HUD rules really force agents and buyers to waste their time, energy and efforts on properties that really arent on the market by accepting bids each day instead of considering ALL bids from Friday, Saturday and Sunday on Monday.
That is my two cents on the issues.
So next time you are looking for HUD properties in Lewis Center, Dublin, Worthington, Westerville, New Albany or anywhere else in Columbus, give me a call to be the first person inside of the property and have the best shot at it!