Working with foreclosure properties has gotten some bad reputation among owner-occupant buyers and their agents as well. It could be related to property condition or to fairly elaborate paperwork process. However, the times are changing and pretty drastically. Here are three reasons why:
Preferences. The three major servicers of foreclosed properties are HUD, Fannie Mae and Freddie Mac. All three are government owned and all three have placed sales to owner-occupants front and center. HUD provides a 15 day bidding preference for owner-occupants under their new program for foreclosure sales. Additionally, there is much needed transparency available to agents and buyers at the new site HUDHomeStore.com to assess a property’s condition before deciding to physically inspect it. Fannie Mae’s KnowYourOptions program offers the best financing in the industry through participating lenders. This very aggressive program offers 3% down payments, no mortgage insurance, no appraisal requirement, and frequent incentives for buyers and agents. Freddie Mac through its HomeSteps program is offering a First Look Initiative that the ability to purchase HomeSteps homes during their initial 20 days of listing (30 days in Nevada, Cook County, IL,
Condition: Many have no idea how far the industry has come in regard to conditions of the foreclosed homes are coming on the today’s market. It was rather ugly in many instances. Today, properties are cleaned out and secure. Regular property inspections by the brokers and field service companies are mandated. There is also a debate within the industry as to how much rehabilitation and staging should be invested by the servicer/owner to make homes more appealing.
Offer Process: This process scared many agents away. It was very time consuming and little status information could be obtained. Selling agents would look to the listing agents and we had no news and no way to really provide a timeline when a response might occur. There are quite a few changes. First, the selling agents are able to enter their offers on-line and have them directly submitted to the lender. An agent registers at HUDHomeStore.com, enters an offer while affirming the existence of an actual Purchase Offer signed by the buyer. Then an email notification is sent if their offer is accepted or they can log into their account and see that an offer was rejected. Many servicers have implemented similar systems.
So, as you consider purchasing a home, or representing an owner-occupant buyer, consider giving the foreclosed property market a new try. It is evolving and the changes, while brought on due to necessity, allow us to navigate this complex process with ease.