HUD just released a new mapping tool. It displays all homes for sale by Fannie Mae, Freddie Mac and HUD on a Google Map. Now you can find all government owned houses for sale on a single website.

The so-called REO Portal was developed for “neighborhood stabilizers” to help them find properties from all 3 agencies in a consolidated map.

The good news is, that the portal is open to the public, not just to government agencies and non-profits who are supposed to buy and rehab properties in depressed areas.

The mapping tool is pretty easy to use.

When you opent the HUD Portal Website it displays a map of the United States. You can enter a street address, a city and state, or select your state and county from a pull-down menu to get to the area you are interested in. The map zooms to the city or county you selected. You can see property markers that indicate the locations of homes for sale once you hit Zoom Level 11 or larger.

The icons for the 3 organizations are shown as:

• FHA – HUD homes
• FRE – Freddie Mac homes
• FNM – Fannie Mae homes

When you click on one of these icons, a pop-up will appear. Sometimes the pop-up shows in the left upper corner of the web page, so you may have to scroll all the way to the top of the page to see it. Dependent on the type of property you will see information about the property, such as, list price, address, agent information and a link to the listing.

On Fannie Mae listings the link goes directly to the individual listing page on Homepath, Freddie Mac listings end up at the general Homesteps page, and HUD listings link directly to the listing page at the HUDHomeStore.

Although the instructions say that you need to register to use the system, it works fine without logging in.

A sign-up is necessary, if you want to create projects. Registration is easy and immediate. It requires a valid email as the username, your name and a password. There’s no confirmation. You can log in right away.

Once logged in, you can draw outlines of areas of interest and save them as “projects”. They will email you a list of properties inside the project area in a spreadsheet, as well as statistical information about the area.

The REO Portal is a nice tool that helps home buyers find government owned real estate easier. Unfortunately, it still lacks the functionality a buyer would expect when searching for a home, such as number of bedrooms and bathrooms, the price range, and square footage you are looking for. Currently, there is no functionality like that available.

Remember the house on Westfall Road in Lancaster that we featured a couple of weeks ago?

It was listed for $72K, way below market value. With retail values of similar homes in the $160K range, it seemed that HUD forgot to add a “1″ in front of the purchase price.

This is a huge, 3,000 sqft, new house with hardwood floors, stainless steel appliances, a large attached garage and a pole barn in the yard. It sits on a 2 acre lot, just a few minutes from the amenities of a large city!

As expected, the low asking price generated a lot of interest in this home. There were more than 40 showings during the initial 10 exclusive period. By the deadline, HUD had 30 offers on the house.

Now this home is in contract.

The winning bid was $115K, that’s 50% higher than its list price.

What can you learn from this Bidding War?

If you are a seller and list your house below its market value, you will generate a lot of interest. This is true in any market, even in today’s economy. It is especially true, if the house is in good condition.

You will receive more offers! And as the seller you can pick the one that’s best for you.

Keep in mind that there’s a buyer for every home – if it’s priced right.

One more trick that’s been used by many REO brokers (but not by HUD): if they receive more than one offer, they call all bidders and ask for a best and final offer. Usually, they will squeeze out another couple thousand bucks for the seller.

If you are a buyer, don’t despair! Despite all the activity, the 30 offers, and the overwhelming competition, the winning bidder still got the house for almost 30% below market value. That’s $45,000  in immediate equity!

What a great deal!

Here’s a quick update on the status of HUD listings in Central Ohio. The total number of HUD Homes in Columbus has dropped to 164 – the lowest level since the beginning of the year.

74% of HUD homes are in Franklin County, the other 26% in the 6 surrounding counties. While these counties maintained their number of listings, Franklin County lost more then 40 HUD homes over the past month. Detailed statistics are at the end of this post.

Great deals can be found outside of Columbus! Just take a look at today’s featured HUD home in Newark.

FEATURED HOME

This charming Newark home is located near the University Campus. It has been recently remodeled and is in very good condition. The repair escrow was established to put a new roof on the garage and repair the kitchen sink.

829 Granville Rd, Newark, OH
Asking Price: $65,000

Comparable Sales: $85,000
Year Built: 1928
Sq Footage: 1,568

Bedrooms: 3
Bathrooms 1/0

Category: Insured w/Escrow
Repairs: $2,420
Schools: Newark

Deadline: 5/22/11
Eligible: owner occupants

HUD Listings per County

Franklin County: 122 (74%)
Delaware County: 4
Licking County: 12
Fairfield County: 8
Pickaway County: 6
Madison County: 6
Union County: 6

TOTAL Number of Central Ohio HUD Listings: 164 (209 at mid-April 2011)

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

Many HUD homes are listed as Insured with Escrow. It seems that this repair escrow confuses many home buyers. Let me explain what the repair escrow means, what it’s for and why it is beneficial for home buyers.

FHA uses 3 categories to describe which type of financing is offered for a specific HUD listing: Insured, Insured with Escrow and Uninsured.

Insured means that you can get regular FHA financing without any additional repairs.

Insured with Escrow indicates that minor repairs, which are specified in the HUD listing (up to $5,000), must be completed before FHA will underwrites a regular loan. They allow the buyer to close on the purchase and add the cost of these repairs to the loan amount. However, the lender must hold this repair costs in escrow until the work is completed. Then it is disbursed to the buyer.

Uninsured means that you cannot get a regular FHA loan, because the house needs more than $5,000 in repairs. In that case you may still apply for an FHA rehab loan, also known as a 203k loan.

Common Questions

Here are the answers to the most common questions we get from buyers on a regular basis.

Can the repair escrow be used with any type of loan?
No. The repair escrow only applies to FHA loans. If you use another type of loan, you will have to do a new appraisal. Based on the appraisers opinion your lender will either underwrite the loan or not, or offer you other options to cover the repairs. Many lenders are very cautious these days. Some won’t underwrite a loan, if carpets are missing, if there are minor holes in the drywall, or even, if there are not appliances.

Does HUD pay for this repair escrow?
No. You have to pay for the repairs. However, as a benefit to the buyer, the amount of the repair escrow can be added to your loan amount. You will have to front the cash and pay your contractors for the repairs, or do them yourself.

Do I have to pay for the repairs?
Yes. You will have to pay for the repairs initially. When the work is complete, the appraiser will come back to your house to verify that everything is done. Only at that time will be lender release the escrow. It can be paid to you in cash as a reimbursement of the cost you incurred to do the repairs, or you can apply it to the principal and reduce your loan amount.

What’s the maximum amount FHA allows?
The maximum repair escrow allowed on a regular FHA loan is $5,000. The exact amount is specified in the HUD listing and disclosed in an addendum called Repair Escrow Information. You have to go with the exact number specified by HUD. You are not allowed to add other repairs to the escrow.

Why should I use the repair escrow anyway?
It is both a benefit and a requirement. FHA requires that you make the repairs specified by HUD in order for them to underwrite an FHA loan. As a benefit, they allow you to pay for these repairs by increasing the amount of your new loan and getting reimbursed, when the work is completed.

If you have any other questions regarding the repair escrow, please leave a comment in the box below and we will answer it on our blog.

Do you realize that there are hidden costs when you buy foreclosed or HUD homes?

I am not talking about out-of-pocket items, such as loan application fees or even the cost of your home inspection. These are fees most buyers are aware of. You already know that you will have to spend some money before the closing that can not be covered by closing costs (most of which are paid by HUD in the form of a closing cost contribution).

The costs I am talking about have to do with utility activation and other services performed by HUD’s field service managers.

Since 3 new field service managers took over in fall of 2010, rules for turning on utilities have changed and so have their fees.

When you look at a property on the HUDHomeStore.com, you can easily find out which field service manager is responsible for a property. Go to the Agent Info tab of a specific property. The field service manager is listed on the right hand side, with all their contact information and email.

Here are the websites of the 3 field service managers responsible for Columbus HUD Homes:

• A2Z Field Services (614) 495-5970
• Innotion Enterprises (703) 351-8151
• Cityside Management

Dependent on the firm in charge of your property, the rules and fees for turning on utilities are different. Fees can range from $100 to more than $200. Some field service managers charge a fee just to authorize you to turn on the utilities, while others provide the plumber  to turn the water on and off, and charge a hefty fee for it.

As a buyer you should not have to deal directly with these firms. This is the job of a good Columbus real estate agent. Your agent receives all required forms and information with the ratified contract. That’s the time to immediately plan if and when you need to get the utilities turned on.

Whenever you schedule a utility activation, make sure you have your “ducks in a row.”

• Your appraiser and inspector should both come during the time when the utilities are turned on, otherwise you need another authorization and pay an extra fee.
• Line up the utility companies, so they will have enough time to schedule the activation of gas, water or electric, while you have permission.
• Have your own contractors ready (if required) to inspect the plumbing, do the pressure test and turn the furnace on.

Utility activation is a hassle with HUD homes and most other foreclosed properties. An experienced real estate agent who has a team of inspectors and contractors will make your life much easier and save you repeat activation fees.

February 2011 is almost over. You may wonder how well HUD homes and other government foreclosed properties, such as Fannie Mae, Freddie Mac and VA houses have been selling this year.

Foreclosed homes are certainly a bargain. Realty Trac reports that foreclosed homes sell for 43% less than regular houses in Ohio.  The average price of a HUD homes is around $75,000, which is similar to all foreclosures.

Nationwide buyers have to pay $100K more for foreclosed homes. And in most states they are just 25% less expensive than other residential listings.

Talking to Columbus real estate agents we are picking up some good news. It appears that buyers made more offers on HUD homes in January. Some brokers tell us that 35% of HUD listings are in contract.

HUD asset managers are struggling to get contracts ratified. It may take more than 2 weeks to get a ratified contract back from HUD after an offer was accepted online.  The lone closing agent in Columbus (Lakeside Title) is scrambling to schedule the closings within the deadlines specified by the asset managers.

We believe that this “buying frenzy” will have a positive impact on the Columbus housing market.

Summary of Government Foreclosed Homes in Central Ohio

HUD Homes Listing Statistics – HUDHomeStore.com

Franklin County: 299
Delaware County: 16
Licking County: 28
Fairfield County: 19
Pickaway County: 16
Madison County: 13
Union County: 3

TOTAL Number of Central Ohio HUD Listings: 394

Freddie Mac Homes Listing Statistics – HomeSteps.com

Franklin County: 95
Delaware County: 6
Licking County: 9
Fairfield County: 7
Pickaway County: 1
Madison County: 3
Union County: 3

TOTAL Number of Central Ohio Freddie Mac Listings: 124

Fannie Mae Homes Listing Statistics – HomePath.com

Franklin County: 347
Delaware County: 43
Licking County: 36
Fairfield County: 34
Pickaway County: 8
Madison County: 13
Union County: 9

TOTAL Number of Central Ohio Fannie Mae Listings: 490

In addition, there are a few VA homes, which you can find at VA listings.

There are basically no homes owned by the Department of Agriculture in Central Ohio. If you want to search USDA home listings, click this link.

Here’s a final thought: the total number of residential properties listed on the Columbus MLS (for the 7 counties) is 13,430. Government foreclosures make less than 10% of all listings.

You are probably wondering why a beautiful house like this one is back on the market?

There are 3 main reasons why HUD homes fall out of contract:

1. The buyer can’t get financing
2. The property inspection uncovers hidden defects
3. The buyer gets frustrated

Do not underestimate the challenges that await you when you buy a HUD house.

It’s a hassle to turn on the utilities, you don’t know what to expect from the property inspection, the lender questions the condition of the house, the A/C unit gets stolen a week before the closing, and the seller (HUD) won’t make any repairs.

As a buyer you will get frustrated and maybe lose motivation to close on the purchase. There are just too many things to put up with.

An experienced Columbus real estate agent who specializes in HUD homes will try to prepare you for these uncertainties before you submit an offer. Most important, your realtor should take as much pressure off your shoulders as possible and manage the HUD house purchase from bid to closing.

After all, you can get a really good deal on Columbus HUD homes. Like the house above, which just came back on the market due to some of these unexpected problems.

You can have this almost new HUD house for only $145K. The original home owner purchased it for $212K, which means you pay 32% less!

Did you ever wonder why some HUD homes don’t sell?

It’s a combination of 3 factors which determine, if a house is a good deal that will be snapped off the MLS as soon as it gets listed, or if it sits forever without even a single showing. The 3 factors that have a negative impact on a HUD listing are:

1. Listing price too high for the type of home (foreclosure or bank-owned)
2. Located in the Columbus school district
3. Needs repairs or has outdated interior

   

Here’s a Columbus HUD home that meets all of these negative criteria. No wonder it has been on the market for more than a month without any offers.

Unfortunately, the asset managers did not reduce its list price, yet. This house is available to investors. But at its current list price of $116K it’s just too expensive for an investor to make any money.

Say you would like to buy this house. What’s your best strategy?

Submit offers! Without an offer you can’t get the house. Start with a low offer, one you feel is reasonable considering the location and condition of the property. The worst thing that can happen is that HUD doesn’t accept your bid. No money lost!

Second best? You may get a counter offer. Sometimes the asset managers decide to counter and you have an opportunity to accept that counter offer.

You don’t have to take it, if it’s still too high. Just continue submitting your preferred price every day. As all offers are submitted online, it only takes a few minutes, and your realtor will gladly do it for you.

Sooner or later the HUD asset manager will settle near your price point!

I know for a fact that this strategy has worked for many years, and it still works with today’s new managers. There’s just one disclaimer to make – this approach may fail, if there’s competition.

When you join me on a house hunting trip you better leave your flip flops and heels at home!

You probably saw the popular TV show “What Not To Wear” on TLC. Although I like Stacy and Clinton’s transformations and style advice, house hunting (especially in Winter) is not the time when you want to dress up. Just the opposite – wear comfortable clothes you can move around in easily and that keep you warm.

As I write this post in the middle of January, I strongly recommend you dress for winter and snow!

Here’s why:

1. Utilities have been turned off in HUD homes and most bank owned properties. These houses are VERY cold inside. If we look at a few of them in a row, there’s no place to warm up, but your car.
2. Snow and Ice are not cleared off the driveway. You may have to wade through a foot of snow just to get to the entrance. The floors are often wet and slippery.

If you are cold, you won’t enjoy your house hunting trip. Believe me, I have been miserable on many a cold winter day inspecting HUD homes.

So, dress for the winter season, bring winter boots, gloves and a hat, because HUD house hunting is not a fashion show.

Call me at (614) 975-9650 to schedule your Winter House Hunting Adventure.

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