Yesterday I had the pleasure of attending a training given by BLB Resources’ Marketing Director, Ray Warda, at the Agua Caliente Casino Resort and Spa in beautiful Rancho Mirage. It was a packed house despite the rainy commute for most attendees coming from the San Gabriel Valley and LA area but well worth the trek.
If you’ve worked with HUD you know things can change… pretty often. As your local HUD Homes Resource and Broker I want to make sure that you have the latest updates and changes:
Exclusive Listing Periods
- Exclusive listing periods for FHA-INSURABLE homes is now 15 days rather than 30.
- Any bids that are placed on Friday, Saturday or Sunday will be combined to be considered on Monday.
- The 10 day accumulation period at the beginning of the Exclusive period for FHA-INSURABLE homes will extend up to 3 days depending on when the 10th day falls.
- Bids that come in on a Federal Holiday will be grouped with the previous days’ bids. For example: Bids that were placed on Thanksgiving will be grouped with Wednesdays bids and will be reviewed and considered today.
Changes as it relates to HUD Homestore…
- Bid submission dates will be extended for bids placed on Friday, Saturday or Sunday. The bid submission deadline will be Sunday at Midnight, Central Time, or Monday at Midnight, Central Time, if that Monday was a Federal Holiday.
- If the listing period stays the same on Friday-Sunday, and Monday if it happens to be a Federal Holiday, bidders can submit just one bid for a single buyer.
- If the listing period changes on the weekend or a Federal Holiday, bidders will be able to submit two bids for the same buyer during that time; one bid during the earlier listing period and one bid during the later listing period.
TIP: The bid submission deadline and the bid submission time remaining on HUD Homestore will let the bidder know how much time they have to place bids in each of the listing periods. For Federal Holidays that fall on a weekday, the bid-submission period will extend from the day before the Holiday until the end of the Holiday.
Elimination of Backup Offers
- Previously if your office was not accepted it was still kept in the system as a possible back up in case the winning bidder backed out or the property fell out of escrow. It was a great option for buyers who really were interested in being considered backups for a certain home in the event that the winning bidder didn’t get their contracts to the Asset Manager within the initial 48 hour deadline because they would be contacted as soon as the initial winner defaulted on the time frame. It also meant that if the winning bidder backed out or cancelled 30 days down the road, the Asset Managers would have to contact each back up bidder and see if they were still interested in the house, with each back up bidder that was being given a chance also came a 48 hour delay which tied up the house and caused unnecessary delays. Many times these buyers had already moved on to other homes and had no interest in the house.
- Now if the winning bidder cancels, the home will be put back on the market and appear on HUDHomeStore.com for old and new bidders to submit their offers without any delay.
Valuation Review Pilot Program
- HUD is now reviewing BPOs, appraisals, and Automated Valuation Models (AVMs) in order to determine the best market value of the home.
How Does this Affect the Bidding Process?
- Previously, HUD Homes were always listed at appraised or “AS IS” value, but with this change you will see more and more homes listed at prices different from the appraised value.
- Appraised Value of the home will no longer be listed on HUDHomeStore.com
- Selling agents will have to make sure that they do their due diligence in looking at the comps around the property before submitting their offers in order to avoid excessive overbids in the case of FHA buyers.
- For Example: Let’s say that the home is listed at $100,000 on HUDHomeStore.com and an FHA buyer submits a winning bid at $110,000, once their contract is ratified by the “seller” the buyer is given a copy of the FHA appraisal and finds out that the appraisal only came in at $90,000, so what now???
- Not only will the buyer be on the hook for the $10,000 overbid from the list price to the accepted amount but will also have to bring in the additional $10,000 to cover the difference from the appraised value to the list price. That’s $20,000 out of pocket from this FHA buyer. PLEASE PLEASE PLEASE make sure that you understand this and explain it thoroughly to your FHA buyers before submitting your offers.
- Ordering 2nd Appraisals: FHA buyers will be able to order a 2nd appraisal, at the buyer’s own cost, if and when the property has been listed at a price Higher than the original FHA appraisal on file.
- How will this help? If the property was listed above the original appraised value and the new appraisal comes in at or above the list price, the buyer will now only have to come in with the difference between the original list price and the amount offered instead of the difference between the original appraised value and the amount offered.
**** I know this can get a little confusing so please feel free to call me so I can explain it over the phone. *****
After reading all of that, you must be asking yourself what hasn’t changed! Well…
- The length of the Exclusive period for FHA-UNINSURED homes is still 5 days.
- Bids that are submitted on weekdays will still be available to your AM on the same schedule as before. As long as none of those days (or Friday) is a Federal Holiday.
- Bids for an earlier listing period are still considered separately from bids from a later listing period.
As always, I am available to answer all of your HUD Home related questions. I am also available for office trainings if you would like me to come in to your office for a How To Successfully Sell HUD Homes Training, please email or call me to schedule it.
For More information please visit my website:
Direct: (626) 252-0839