Following the blueprint set by Fannie Mae in late 2009, the United States Department of Housing and Urban Development (HUD) appears to be further stacking the deck against real estate investors. While in the process of restructuring the way they sell their foreclosed property inventory, HUD has taken the opportunity to shift the bidding advantage even further towards owner-occupants and away from investors.
Previously, when any HUD-owned property hit the market, owner-occupants had exclusive the exclusive right to bid for the first ten days. After that, they usually had bid-preference for a couple more weeks, but any buyer would have a right to bid after the initial 10-day period. This allowed real estate investors to purchase as-is properties for rehab or rental in a relatively timely fashion, while allowing owner-occupants the opportunity to purchase homes that were in good shape. Since one of HUD’s main goals is to encourage homeownership, these rules seemed to be true to their mission.
Under the new rules now in affect, the exclusive bidding period for owner-occupants is being extended significantly for many properties. Any properties which HUD deems to be FHA Insurable or FHA Insurable with Escrow (needing $5000 or less in work) will now have an exclusive 30-day bidding period for owner-occupants. So not only will these purchasers being given preference on these properties, they will be the only parties who has a right to even make an offer.
However, the new HUD policies are not all bad news. From now on, any property that deems as FHA Uninsurable (needing more than $5000 worth of work) will be offered exclusively to owner-occupants for only 5 days. From the sixth day onward, all buyers will be welcome to bid without preference. That means that buildings in need of a true rehab will still largely be left to the realm of professional rehabbers. So while these changes will make purchasing more difficult for the typical real estate investor, they still leave room to make a profit. You’ll just have to be a little more patient from now on when dealing with HUD-owned properties.
For a look at HUD’s current inventory check our their website at HUDhomestore.com. And remember, Threshold Properties is an approved HUD agency.