HUD - Owner Occupant
When buying HUD properties there is a period when the properties are sold ONLY to owner occupant...is there a way around this? There are several properties being sold very quickly in my area and I dont believe for one minute that they are being sold to owner occupants!
Thanks
Anita
You got it, they probably are not. Someone has gone to those folks, negotiated to pay off their note, given them walking away money. Got a quit-claim deed. Low and behold after the owner/occupant pay's off the quit claim will get recorded.
Anita,
You are probably correct. This happens in my area as well as several people are purchasing several homes during the owner occupant period. However, this is not something i personally would do as HUD is a Govt agency and i would not play with their rules. On the flip side, the owner occupant period is only 10 days in NC, so you might need to just wait a few days.
Thanks for your responses...NC...the waiting period differs here depending on the property perhaps???....not sure haven't figured it out yet. But, what I do know is that anything that gets past the waiting period generally is not worth bidding on:-(....that is why I know that investors are scooping up the good stuff. I do agree with you...I do not want to mess with the government.....there is a $250k fine and up to 2 years in the big house
...the house that NO ONE wants to buy!!!...LOL...but I had to ask the question...I was curious
Thanks again [ Edited by RESolutions on Date 04/05/2004 ]
I just talked to a REALTOR and supposedly in Texas, you have to wait 3 cycles(6 weeks) before investors can bid on OWNER OCCUPANT houses.
Its a 5 day period in Washington State.
I can only conclude that the waiting period varies from state to state.
I have the same problem here. I know for a fact that investors are buying properites during this period, but get away with it since they finance using conventional loans.
Its not worth it to me, so I don't take that risk. The right property will come up, I am sure.
Good luck!
Vasiliy
Commercialking,
So...you are saying people are buying the HUD home directly from the current owner of the house? Is is legal? And if it is...how hard is it to do that?
Thank you,
Quote:Commercialking,
So...you are saying people are buying the HUD home directly from the current owner of the house? Is is legal? And if it is...how hard is it to do that? joxtal,
Commercialking may be talking about a pre-foreclosure strategy, but his comment has no application to HUD foreclosures and the HUD auction procedures.
I bid on a house in Colorado that sold 2 years earlier for 78k and I bid 31k as an investor. The winning bid was for 28k during the owner occ. only period. I have been trying to figure out a way ever since, and I haven't been successful.
I would suggest following up on a few of the sales and talking to the people who move in, if they aren't the owners I'm sure they would tell you who is. You could then call the owners and ask them (not that they will tell you if they are doing something illegal).
Thats my only suggestion. 8-)
Quote:I just talked to a REALTOR and supposedly in Texas, you have to wait 3 cycles(6 weeks) before investors can bid on OWNER OCCUPANT houses.
chedaw,
During the first 45 days (about six weeks, or three cycles), HUD will only consider full price offers (Perhaps this is what the Realtor really meant). After the full price period has passed, then HUD will consider less than full price offers.
During the first 10 days of a newly listed property, the bidding is restricted to owner-occupants only. The first 5 days of this 10-day period is also a simultaneous bid period, meaning that no bids are opened until the end of the 5th day. Days 6 through 10 are daily bid periods.
If the property is not sold during the owner occupant period, the bidding is open to "All Purchasers" to include investors as well as owner occupants. During this phase, all bids are opened daily and the highest acceptable bid submitted that day is declared the winning bid.
If a winning bid happens to fall through and for some reason the buyer defaults, the property comes back on the market as a relisted property. Relisted properties also follow the same process I described, but the owner-occupant simultaneous bid period is shortened to five days. On day six, if the property has not sold, daily bids from "All Purchasers" are considered until HUD receives an acceptable bid.[ Edited by DaveT on Date 04/08/2004 ]
DaveT,
You sure sound like you have a lot of experience in REI. Do you deal with HUD sales? I was NOT thinking about doing it before...but now I am looking into it. I and my husband are renting a house right now...so we can purchase it as owners occp, live there for two years and sale it. That way, we don't have to pay capital gain. Right? If we do have to move... what is the minimum length we have to live there before we can either rent or sale the home. (We will be using VA)
I have been trying to locate motivated preforeclosure seller by looking at legal notices, sending postcard, putting ads in newspaper and etc...but have not been successful. (Any suggestions gettting at least ONE deal done? :-D )
I have heard that alot of bids that are lower than the lising price have been accepted by HUD...so I guess if I keep making motiple offers with low bid price to each home, I may still get good deal which will produce some profit. What do you think of this strategy??
Everyone,
In every FHA (hud) laon package there is a form to be signed by the buyer who intends to be o/o FHA guidelines for o/o are as follows, move in 30 days from the close of escrow and occupy the residence for 12 mos. consecutively, I'm positive state law will not supercede federal law in this instance. However, what FHA does to qualify unforseen circumstances is intent, what was the borrowers intent when they closed, job loss, wage loss or reduction, job relocation, anything that is beyond the borrowers control may be acceptable.
As far as questionable occupancy I'll bet there is fraud and collusion on the part of buyer, loan officer, real estate agent either individually or collectively. If you think there is fraud call your local HUD office and tell them you want to report a suspicious possibly illegal purchase insured by HUD, HUD has a very aggressive quality control division that doesn't mess arount, get caught , go to prison, the lender loses their license the agt, loan officer, buyer and possibly the seller go to prison!! HUD is a federal agency they don't call the local sheriff they call the FBI, remember there is no statute of limitations on this crime.
I also suggest anyone who has the courage to report a possible fraud so your own due dilligence and order a property profile, see if the new purchaser is a Delaware Corp. and post your findings here
joxtal,
Quote:DaveT, You sure sound like you have a lot of experience in REI. Do you deal with HUD sales?I have purchased only about a dozen HUD properties in the last few years, with my most recent purchase in Jan 2003.
Quote:I was NOT thinking about doing it before...but now I am looking into it. I and my husband are renting a house right now...so we can purchase it as owners occp, live there for two years and sale it. That way, we don't have to pay capital gain. Right? Right. After two years as an owner occupant, you are free to sell the property and keep all your profit tax free.
Quote:If we do have to move... what is the minimum length we have to live there before we can either rent or sale the home. (We will be using VA)VA has a one year minimum owner-occupancy requirement. However, if your life circumstances change and you are forced to move (job relocation is a good example), then you can either convert to rental or sell the property without regard to the VA owner-occupancy requirement.
Quote:I have heard that alot of bids that are lower than the lising price have been accepted by HUD...so I guess if I keep making motiple offers with low bid price to each home, I may still get good deal which will produce some profit. What do you think of this strategy??
If the HUD property is in the first forty-five days of its listing, HUD will only consider full price offers. After that, HUD will consider less than full price offers.
A full price offer is one in which HUD will net 87% of the list price on an investor purchase, and 89% of the list price on an owner-occupant purchase. Your broker's commission, the broad listing broker's fee, and any requested closing cost assistance are all factors that reduce the net sale proceeds to HUD.
As an investor, if your broker takes a full 5% commission, and you do not ask for any closing cost assistance, then to give HUD its minimum acceptable net, your bid price must be at about 92.6% of the list price (or higher). I am allowing for a full 1% broad listing broker fee in addition to a 5% sales commission.
Multiple offers on a HUD property are a waste of time. HUD will only consider the offer with the highest net proceeds to HUD and will disregard all other offers from the same bidder.
Simultaneous offers on multiple HUD properties is another story. Your selling broker may require a separate deposit for each offer submitted. When you are bidding on several properties at the same time, you also need to make sure that you can settle on all the properties you win at the auction. Failure to settle will result in forfeiture of your deposit.
Remember, each bid is evaluated separately. If your bid does not meet or exceed HUD's required minimum then your bid is not accepted.
Hud has another little goodie which is giving a priority to non profit corporations. They get the edge to buy anything worth buying, fixing up.
The strange thing is that of all the 8 transactions I have monitored. None of the entities were non profit for real. They make an offer forward as a non profit but as they fix up and then put back on the market and I check deeds and entities. There are no non profits present.
I would not complain it is not my nature. I am of course on occasion willing to deal with the fixer upper. Several times I have taken over because their fixup is so primative and so cheap they are just creating additional problems as failures occur in the future. It takes more then spit and paint to properly repair and make habitable some of these properties coming back from prior HUD owners. I think the one up the street in which the area of the toilet the flooring is some two inches below the rest of the floor. he just vynal over. Very strange. I love the plumbing corrections with insertions of schedule 40 white plastic pipe. Shall I go on? Where oh where are the building inspectors on these jobs. Or the reroof with all the rafters installed Crowns down. Oh my god wait til they get to heaven. How will they explain these little sins to an ex carpenter?
Cheers Lucius 8-) 8-)
Lufos,
no inspection reqd on a rehab, but it should have been caught by an subsequent appraisal