In February we received a call on a property that had been foreclosed on by HUD (Housing & Urban Development). The buyer was looking to purchase the house and rehab the property. When we met the buyer, his thoughts were to purchase it and put his daughter in as a tenant.
This sounded like a great idea and after looking as his 401k, he decided a smart use of what money he still had in his account.
In Michigan the process to buy a HUD-owned home is similar to a number of states. The offer is presented on line – if you are successful in your bid you have 24 hours to supply the paperwork to the attorney firm that is handling the process.
All went quite well and HUD accepted our offer on the property.
Now we wanted to do inspections. As is typical in vacant HUD properties, we need to turn the utilities on to do the inspections. The local power company would not turn the power on until an electrical upgrade was completed.
We called the attorney firm and they indicated another department in Arizona took care of that. It would take a few days to get the quotes in to authorize the upgrade. As it turns out, they need 3 quotes and the guy in Arizona only had 2 approved contractors. After a few weeks of waiting we did our own quote and called the attorney and asked if we could do the upgrade at no cost to HUD and then do our inspections.
The answer: No, they would not allow anyone in the house that was not approved.
I went through the layers of management to get to a supervisor that indicated he “was all over this” and he would make it happen. Another month of phone calls and frustration finally got the bids in and received a call from another department.
This department indicated the bids were in but now they had to check with HUD to see if they would do the work since all properties were purchased “as is”. I asked why they did not mention that we would not have the opportunity to do our inspections before we had gone through nearly 3 months of waiting.
He did not have an answer but would get back to us.
Finally approved but the approved contractor could not get to the job for a while.
The buyer, totally frustrated by now, decided he still wanted the property.
With nearly 3 months of phone calls and lack of action by HUD, he offered to buy the home without inspections, if they would give a credit at close for the electrical repairs.
The calls were made and the approval granted. FINALLY!!!
Now we have 3 days to get the home closed before the offer expires.
If not closed in 3 days, we would have to file for an extension of the agreement which might cost the buyer because he had not closed in a timely manner.
We did close on the last possible day without too much issue.
Why do we do this?
Because the buyers are so happy! The Buyer’s daughter actually bought the home and has a mortgage from the parents so she can get the “First Time Buyer Home Credit”.
They are happily cleaning and preparing to move in to the home.
The electric is upgraded and the repairs are being completed.
The moral of the story:
In this housing market, buyers that never would have been able to buy can own a home ——- if they have patience to go through the process. Short Sales and Foreclosure Sales are not the usual real estate transaction. You will need patience with a capital “P” and an agent that is familiar with the paperwork and legalities involved in these type of sales.
They are frustrating and time consuming, so don’t expect to finalize these sales in the normal amount of time, i.e., 1-2 months.
**Note: Having a parent or relative fund the mortgage is another option to a bank mortgage.
The $ Benefits of the First Time Home Buyers Tax Credit
Buying Foreclosed Homes is NOT FUN
If you have the patience to buy a HUD-owned home or a foreclosure Home, please contact us at 1-888-240-1968 ext 0 or email us at:
Grand Rapids Ada Real Estate ~ Westbrook Realty
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