It may sound strange that a HUD home that’s offered below market value could actually hurt the buyer. Unfortunately, that’s the case. Let me explain …

Initially, HUD homes are listed at the value of the FHA appraisal that HUD orders before they put a house on the market. The listing agent may offer a price opinion (BPO) based on current market conditions and recent sales, but does not set the asking price.

Although appraisers should consider the same information, sometimes they are off. On rare occasions they come in way below the market value of a home for sale.

When that happens the house could become a true bargain and attract a lot of attention. We see it all the time. Real estate agents and buyers flock to these properties during the initial 10-day exclusive bidding period. Many submit offers and create a buying frenzy.

There are 2 major reasons why underpricing of HUD homes in Columbus may hurt prospective buyers.

Bidding Wars

The increased interest in a HUD house offered for less than its real value leads to bidding wars.  Buyers bid more than list price, when they submit an offer.

In many instances the contract price even goes beyond the market value of the property. That’s good for the seller (HUD), but bad for the buyer who wanted to find a deal.

Bidding wars have left many buyers in the dust, as they could not afford to compete with ever increasing offers.

Extra Cash at Closing

When you offer more than the appraised value on a HUD property, you create an unexpected problem for yourself.

If you overbid on a HUD home, FHA will base your loan amount on the existing FHA appraisal of the HUD home, not your purchase price. FHA will lend 96.5% of the as-is value  listed on the HUDhomestore. You have to bring the difference in cash to the closing. FHA does not allow a new appraisal.

All of a sudden your down payment has increased significantly.

An Underpriced HUD Condo

Here’s an example: the free standing HUD condo shown at the top of this article was priced at $65K, its FHA appraised value. Broker price opinions by various real estate agents came in around $75K.

This HUD home was substantially underpriced. The winning bidder offered $75K, $10K more than list price.

Once the contract was signed, the buyer discovered that FHA would only loan $62K on the house. The buyer had to come up with the difference.  That’s $10,000 more than they originally budgeted as a down payment.

What to do, if you Overbid?

You have 3 options, if you overbid on a HUD home:

1. Find a Different Lender. Any lender, except of FHA, will order a new appraisal, which will probably come in close to your purchase price. Dependent on the type of loan (VA, USDA) your down payment may be more or less than on an FHA loan. Be aware that you may run into issues with your new lender, if the HUD house is listed as insured with escrow and needs repairs.
2. Pay the Difference in Cash. If your purchase is really a good deal, it may be better for you to pay the difference in cash. FHA allows you to get money for the purchase from family members. Keeping the mortgage lower will also lower your monthly payments.
3. Get out of the Contract. This is my least favorite option, although it’s the one most buyers pick. You may get your earnest money back, if you can’t get financing. Your real estate agent has to work hard to help you get the refund.

Finding an underpriced HUD home may not be the winner you hoped for. However, if you are aware of the issues we discussed in this article, you can prepare your contingencies. And you may get a really good deal, after a few other buyers had to get out of the contract due to financing issues.

These two must be the most affordable HUD homes in Columbus. They are cheap. Each is listed for less than $10,000. A smart investor will be able to make a lot of money on these Columbus houses.

2414 Parkwood, Cols, 43211               141 S. Ogden Ave, Cols, 43204

HUD-owned houses like these are mostly purchased by savvy investors, who know that there is gold behind the surface.  The government is a very motivated seller and will do whatever it takes to get rid of these homes. In the worst case they will end up as $1 HUD homes offered to the City or a non-profit community organization.

Make Money as a Landlord

As I did not see the inside, I can’t say how much work they need. However, based on my experience as a real estate investor and landlord, I would estimate that it takes between $15K and $20K to make them Section 8 compliant and rentable.

After proper rehab, these HUD homes should rent for at least $600 a piece, probably more. If an investor puts a total of $25,000 into a house and rents it for $600 per month, the total annual income would be $7,200 – a 29% return on the total investment. Of course, you have to consider property taxes, insurance and vacancy expenses.

Now this deal does not look that bad, but it’s not for everyone.

It will take an investor that has the cash or access to rehab money, and wants to take on this challenge. But there is a good chance that the investment will be recovered in 4 years. Then you own a free and clear house, and your rental cash flow is pure profit.

Interesting Facts about these HUD Listings

141 Ogden is listed with a minimum commission of $1,250 each to buyers and sellers agents. This means that after closing costs and commissioins there won’t be much left for HUD.

2414 Parkwood does not have a minimum commission. Now imagine how hard a real estate agent will work for 3% of $3,000? Yes, that’s just $90. It won’t even pay for the gas to show the house.

When you look at the sales history of these 2 HUD homes, you can estimate the approximate amount of the FHA loan that was originally used to purchase these houses. 2414 Parkwood sold in 1996 for $23,800 and the auditor has it valued at $25,300. 141 Ogden’s last owner paid $43,714 in 1995 and now it’s valued at $29,600 by the auditor.

If you haven’t been looking for HUD homes in Columbus, Ohio you probably don’t know the Hilltop. It is a large area on the west-side of Columbus, North and South of West Broad Street from the I-70 interchange going West to Hague Avenue. The area West of Hague up to the new Casino site (near Westland) is sometimes included in the Hilltop, as well.

Many homes on the Hilltop are rentals, although there are quite a few owner occupied homes in the area, as well. This is a blue collar neighborhood that is ideal for investors who want to buy a property to rent it for a positive cash flow.

In the current housing market, homes for sale on the Hilltop are cheap. You will find many bank-owned and HUD houses for sale in the $20K to $30K range. A few years ago homes sold for as much as $85,000 in that area.

Whether you buy a house to live in or to rent out, you should jump on the deal below. It is truly a STEAL!

This HUD home is in good condition. It comes with a gas fireplace, a wooden deck, a 2 car garage and lots of beautiful, original woodwork. It is almost in move in condition.

At LESS THAN $9 per sqft it must be one of the best deals I ever saw in Columbus. You certainly could not rebuild a house like that for such a low price.

Yes, it will need a few thousand dollars in work, and you can’t get FHA financing, because it is listed as uninsured. But you don’t want to go to a bank for a $11K loan anyway, because your closing costs may be 50% of the purchase price.

Now let’s talk about cash flow. Investors need to know how the return on their investment, before they spend money on a rental property.

3 bedroom homes on the Hilltop rent for at least $650 per month, possibly more. This means that your yearly rental income could be as high as $7,800. In just one and a half years an investor could recover the purchase price of this house and generate a huge, positive cash flow after just 18 months.

Here are the details on this specific HUD house (click on the address or the picture at the beginning of this article to see the property website).

289 S. Burgess Ave., Columbus, OH
Asking Price: $11,000
Comparable Sales: $50,000

Year Built: 1907
Sq Footage: 1,246
Bedrooms: 3
Bathrooms 1/0

Category: UnInsured
Schools: Columbus

Deadline: 4/19/2011
Eligible: Owner Occupants

Something is bothering me today, and I would like to find out what you think!

Here’s what it is.  HUD has asked their listing brokers to market properties as “regular listings”, not as HUD homes. I presume they believe this will lead to more showings and higher offers.

• Do you think that’s a good idea?
• Are they trying to hide something a buyer should know before they look at a home?
• Does it make any difference for you as home buyer?

Click here to give me your opinion!  Please answer these 5 short questions. It will take approximately one minute. I really appreciate your honest feedback on this topic!

Here are the Results of the HUD Homes Opinion Poll!

The total number of HUD homes in Columbus is steady above 400. Here are the stats and 5 of my newest HUD listings!

HUD Homes Listing Statistics

HUD Homes Previews

4015 Shannon Green Dr, Canal Winchester, OH
2BR 2.5BA 1,342 sqft Listed for $67,000

5153 Mapleridge Dr, Columbus, OH
3BR 1.0BA 988 sqft Listed for $35,000

1903 Rosemont Avenue, Columbus, OH
2BR 1.0BA 1,004 sqft Listed for $26,244

1389 E. 21st Ave., Columbus, OH
2BR 2.0BA 816 sqft Listed for $11,000

3154 E. 13th Ave. COLUMBUS, OH
2BR 1.0BA 762 sqft Listed for $5,000

Call me at (614) 975-9650 to see the inside of any HUD house!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

The number of HUD homes in Columbus is still increasing. Below are 5 of our newest HUD listings. Three of them are newer houses in the suburbs, one is located in Lancaster and the last one is a low cost rental house in Linden.

As a bonus I added a vacant lot.

That’s right – HUD owns vacant lots. The home that used to sit on this lot was completely destroyed in a fire and ultimately torn down. This is a great opportunity for builders – the subdivision was originally developed in 1997.

HUD Homes Listing Statistics

Franklin County: 322
Delaware County: 14
Licking County: 29
Fairfield County: 22
Pickaway County: 17
Madison County: 12
Union County: 4

TOTAL Number of Central Ohio HUD Listings: 420

HUD Homes Previews

7930 Brianna Dr., Blacklick, OH
4BR 2.5BA 1,917 sqft Listed for $129,900

51 Grisby Lane, Pickerington, OH
4BR 2.5BA 2,548 sqft Listed for $140,000

2852 Medora Dr., Grove City, OH
3BR 1.5BA 1,654 sqft Listed for $68,000

2810 Lancaster Thornville Rd, Lancaster, OH
3BR 2.0BA 1,320 sqft Listed for $73,695

1433 E. 21st Ave., Columbus, OH
2BR 1.0BA 824 sqft Listed for $17,000

BONUS HUD LISTING – Vacant Lot in newer subdivision

5022 Easy Court, Columbus, OH
Vacant lot, Listed for $20,000

Call me at (614) 975-9650 to see the inside of any HUD house!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

Let’s ring in the new year with 402 HUD Listings!

Never before did we see such a huge selection of HUD homes in Columbus. And you should take advantage of it. With the economy growing again and interest rates going up (for the past 5 consecutive months) it’s time to make up your mind and submit an offer.

Here are the specifics for the 7 Central Ohio Counties:

HUD Homes Listing Statistics

Franklin County: 310
Delaware County: 12
Licking County: 24
Fairfield County: 20
Pickaway County: 20
Madison County: 12
Union County: 4

TOTAL Number of Central Ohio HUD Listings: 402

Enjoy the previews of 5 of my listings!

118 W. Cochocton St, Johnstown, OH
3BR 1.0BA 1,392 sqft Listed for $80,000

3423 Hail Ridge Dr, Reynoldsburg, OH
3BR 2.5BA 1,483 sqft Listed for $113,000

2133 Jade St, Grove City, OH
3BR 1.5BA 1,234 sqft Listed for $58,000

3338 Omega Dr, Columbus, OH
4BR 2.5BA 2,351 sqft Listed for $145,000

3641 Hollowwood Ave, Columbus, OH
4BR 1.5BA 1,456 sqft Listed for $64,000

Call me at (614) 975-9650 to see the inside of any HUD house!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

Let me start with a heart felt Thank You to all of my readers and Holiday Greetings. I am really glad that you are interested in HUD houses and I hope my articles are helpful for you.

The past 2 months were CRAZY. We received so many new HUD listing assignments that we were scrambling over most of December to get them up on the MLS. You will find 410 HUD houses for sale in Central Ohio.

To see all of my HUD Home Listings with 18 pictures, videos and comment, click here!

Let’s take a closer look at 6 of our listings.

2879 Liberty Bell Lane, Reynoldsburg, OH
3BR 2.0BA 1,587 sqft  Listed for $78,003

218 Sonoma Dr, Delaware, OH
3BR 2.5BA 1,512 sqft  Listed for $116,000

1048 Wildwood Avenue, Columbus, OH
3BR 1.0BA 1,410 sqft  Listed for $22,000

204 Richards Street, Danville, OH
2BR 2.0BA 1,120 sqft  Listed for $52,000

5270 Arrowood Loop E., Columbus, OH
4BR 2.5BA 2,100 sqft  Listed for $116,000

101 N. Westmoor Ave., Columbus, OH
3BR 2.0BA 1,322 sqft  Listed for $25,000

Call me at (614) 975-9650 to check out some HUD Homes!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

It may be hard to believe, but there’s a HUD house hidden among the animated Christmas lights along this Reynoldsburg Street.

Watch this video to get a sense of the Holiday Wonderland:

This is probably one of the most inviting neighborhoods in Columbus. And it’s all for a good cause. If you go to check it out, please bring a few canned food items. They are collecting for the Mid Ohio Foodbank.

You can find directions at Picktownlights.com

The house itself is not that old, however, it needs plumbing repairs.

3423 Hail Ridge Dr., Reynoldsburg, OH
3BR, 2.5BA, 1,483 sqft, Listed for $113,000

It gets even better. Below you will find the deal of the year!

Trust me!

You can get this German Village Duplex for $76K. It is newly renovated and has never been lived in.

Why does HUD allow this deal?

Actually, these are 2 HUD condos with a single case number. The previous owner bought it as a double and split it into condos. Now you can buy one of the condos as an owner occupant with FHA financing for $76K and you will get the other one for free.

Take a look at the pictures and call me immediately at (614) 975-9650.!

506 Elsmere St., Columbus, OH
2BR, 1.5BA, 1,109 sqft per unit, Listed for only $76,000
The second unit will be transferred to you on the same deed for free!

Definitely call today: (614) 975-9650.

This is probably the best HUD home I ever listed!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

When we listen to the news we often hear that the real estate bubble burst in the fall of 2008. This would indicate that it reached its peak sometime earlier that year.

I was quite surprised to find out that this is not correct – at least not in Central Ohio.

The Columbus housing market peaked in 2005 and has declined ever since. I will write a blogpost that shows how Columbus real estate evolved over the past 20 years at Ohioprettyhomes.com.

When it comes to the total number of HUD homes available in Central Ohio, we now have more than 230 listings.

Franklin County: 178
Delaware County: 4
Licking County: 17
Fairfield County: 12
Pickaway County: 12
Madison County: 10
Union County: 1
TOTAL Number of Central Ohio HUD Listings: 234

Did you know that only 1.3% of all houses listed in Central Ohio are HUD homes?

Check out the Columbus houses I previewed this past week:

3988 Wintergreen Blvd, Columbus, OH

Call me today at (614) 975-9650 with all your home buying questions!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650

A year ago home sales were soaring and we all hoped that the real estate market has turned around.

Unfortunately, the mini-boom did not last. A week ago the Columbus Board of Realtors announced that October homes sales in Central Ohio dropped by 34% as compared to a year ago.

Read my new blog post to see why we experienced such a significant drop in Columbus home sales. It shows  charts and tables with detailed numbers.

Here’s my weekly update of the total number of HUD homes listed in Central Ohio. We are almost back to the level before HUD changed asset managers.

Franklin County: 151
Delaware County: 1
Licking County: 14
Fairfield County: 9
Pickaway County: 8
Madison County: 5
Union County: 0
TOTAL Number of Central Ohio HUD Listings: 188

There’s more to come! Many new HUD listings will hit the market in the next couple of weeks. Our own brokerage has a substantial backlog of HUD homes that are ready to list. But they did not go “live”, yet.

Check out the 5 HUD houses I previewed for this past week:

1903 Rosemont Ave, Columbus, OH

Call me today at (614) 975-9650 with all your home buying questions!

Thanks for reading our Columbus HUD Homes Blog
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Realtors specializing in
HUD Homes, Shortsales, Investment Real Estate
(614) 975-9650