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Rob Burns' Blog

By Rob Burns | Agent in Jacksonville, FL
  • What Do You Believe About The Real Estate Market Recovery?

    Posted Under: Home Buying in Jacksonville, Home Selling in Jacksonville  |  July 24, 2013 11:02 AM  |  294 views  |  No comments

    Like anything else, real estate has its urban legends, its stories that get told so often they seem like they must be true. But unlike urban legends about exploding Pop Rocks or the origins of Jennifer Aniston’s ‘Friends’-era haircut, real estate myths have the potential to create fear, panic, paralysis and all sorts of other decision glitches.

    The recent market upturn, coming on the heels of 6 years of near-Depression, has given rise to its own set of real estate myths.  Here is a handful, along with some ways you can and should rethink them.

    Myth #1.  It’s recovering too fast.  According to the Standard & Poor’s/Case-Shiller home-price index, American home prices increased an average of 10.6 percent between March 2012 and March 2013. Twelve of the 20 major metro areas tracked had year-over-year median home price increases in the double-digits. The list was topped by Phoenix, San Francisco and Las Vegas, all of which saw 20 percent or greater annual home price increases.

    That seems too fast, to some. So crazy, in fact, that it’s created the fear that the current market’s exuberance will re-create the steep incline and decline in home values that we all remember not-so-fondly from the last boom-bust cycle.

    Here’s the deal: markets have cycles, period. So I can guarantee you that the ups and downs will repeat, though hopefully not to such extremes. Part of what made the last down cycle so extreme was the fact that lenders were greenlighting massive home loans to borrowers without requiring them to document their ability to pay for the property over the long term. Buyers, in turn, overextended themselves regularly. Today’s loans are allowing people to buy without putting much down, but I haven’t seen almost any examples of the fully stated income or so-called “liar’s” loans that really got people in trouble. (Yet.)

    Here’s the other thing: the data can be a bit misleading.  When an area’s home values have been very, very depressed for long, it simply doesn’t take that vast of an uptick to generate double-digit percentage point increases. When you look at the top five recovery markets, according to the Case-Shiller, four of them: Phoenix, Las Vegas, Miami and Tampa – ranked among the hardest hit markets in the foreclosure crisis and resulting downturn. (San Francisco was the anomaly.)  When you look at other markets that skated through the recession relatively unscathed, like New York, you see the percentage point increase year-over-year was much less impressive/ less scary (depending on your outlook), at 2.6 percent.

    Myth #2.  Investors are driving demand. In some areas, investors are buying up lots of low-priced homes. From big Wall Street investment groups to Mom-and-Pop investors, people who don’t plan to live in the homes they’re buying were responsible for about 20% of May home sales. But this number is actually on a downward path – investors were responsible for 22% of home sales in April, and investor activity should continue to decline as prices increase, putting a cap on the profits investors can realize.

    While investor activity is declining, buyer demand is increasing, as evidenced by increasing numbers of cash transactions, offers per property and speed of homes leaving the market. First-time buyers are responsible for 36% of current buyer activity and repeat homeowners for over 43%. Investors have been active, but by no means are they responsible for creating the intense buyer demand that now characterizes the market.

    Myth #3.  Sellers are stuck.  This time, let’s start with what’s true. Many, many sellers in hot markets are in the midst of an exasperating Catch-22:  they can finally sell their homes, which have been underwater for years. But now they struggle to buy, amidst the multiple offer mania – some report having to make offers on dozens of homes, or even having to rent a place until they can buy one.

    As I see it, sellers aren’t stuck as much as they are being forced into being strategic about sequencing their transactions and setting up their deal points. During the recession, millions of sellers had no equity – or negative equity. That meant they couldn’t sell, which meant they didn’t have the money to buy – heck, many couldn’t even refinance. That’s what I call stuck. Now, they have the option to pull cash out to buy first, the option to refinance and stay put, and the option to sell – period.  So for my dollar, today’s sellers are nowhere near stuck, compared with the truly stuck sellers of yesteryear.

    Most of the sellers who have recently, truly gotten stuck (i.e., sellers who’ve been forced to rent until they could successfully buy) ended up in that situation because they listed their homes first, unaware that the market truly had shifted and that their home would fly off the market. Now, we know. So, if you’re selling in a super-hot market, work with your agent to put a strategy in place. Consider buying first, if you have the means or can get them. Or list your home with a Seller’s Contingency or a rent-back agreement (where your home’s buyer rents it back to you for a short time), to buy yourself some extra time to score a new place.

    Myth #4.  Rates are through the roof.  Have mortgage interest rates gone up?  Yes.  Is the Fed signaling they intend to raise rates, too?  Yes - in 2015.

    Last week’s reported 30 year mortgage rates were 3.94 percent, and 15-year rates were right around 3%.  Given that the record low rates clocked in at 3.31 (30-year) and 2.62 (15-year), even today’s higher rates are not worth your worry.  Nor is an increase of rates likely to cause all the pent-up buyer demand of the last few years to dissipate.  My Dad used to remind me that people bought homes when rates were 14% in the 80’s, and they will buy them now, even as they inch up – because they need and want places to live.

    Myth #5.  Foreclosures are a thing of the past. Through the recession, many banks and mortgage servicers began to hold hundreds of thousands of foreclosed homes off the market to avoid flooding it, depressing prices even further than they already were. And even now, these institutions continue to trickle them onto the market, rather than creating a deluge of home inventory. Additionally, mortgage regulators now allow servicers to rent out REOs, versus selling them, and to hold them as long as 5 or 10 years following foreclosure, if needed.

    While we are seeing a steep decline in the number of newly foreclosured homes, we can expect to have a higher-than-average number of foreclosed homes – REOs – on the market for some years to come. This so-called “shadow inventory” had declined over 10% nationwide between January 2012 and January 2013.  And with the uptick in demand, we should continue to see this so-called “shadow inventory” of homes decline as banks take the opportunity to get these homes off their books.

     

    Credit to Tara-Nicholle Nelson
  • Realtors in Jacksonville FL-How to choose one?

    Posted Under: Home Buying in Jacksonville, Home Selling in Jacksonville  |  July 24, 2013 11:00 AM  |  307 views  |  No comments

    Realtors in Jacksonville Fl-How to choose one? The decision to buy or sell a home is one of the most important financial decisions most people make, yet many give little thought to finding the Realtor best suited to their needs.

    Agents are often chosen solely on the recommendation of a friend or an ad somewhere. But choosing the right Realtor can save you time, effort and frustration in finding the perfect home at a price you can afford or getting the most money for your home.

    Realtors in Jacksonville FL

    The most important thing when either buying or selling a home is to select the right real estate agent, but people usually go about it backwards. They go online or get one of the home magazines in the supermarkets, and they call about a home they see advertised. They should first select the real estate agent -- one who will understand what they need and can navigate the system for them.

    One of the most important first steps is to find a quality, competent Realtor that is on your side…hiring one based on the first agent that answers the phone and jumps in the car to open a house for you is like hiring a brain surgeon who will meet you in the operating room ready for surgery without even examining you first (ok maybe that’s a bit extreme but you get the point) Quality agents are busy and require a consultation with you first to make sure you both are a good fit and to see if expectations are realistic on both sides.

    So how do you pick? Consider choosing an agent who is a Realtor. In addition to being licensed by the state to sell real estate, Realtors belong to the National Association of Realtors and must abide by a strict Code of Ethics. The National Association of Realtors has a code of ethics that will knock your socks off, and they are very strict in dealing with people who don't abide by them. Also, only Realtors in the Jacksonville Fl area have access to Multiple Listing Services (MLS) through which members share listings and have access to many more properties than non-members.

    Then you will want to see who is active in YOUR community, and I don’t mean the company but the actual agent. Like every company in the world you have top producers and you have everyone else. Just because XYZ Company is the biggest doesn’t mean the agent you will get on the phone is experienced. You want to seek out the individual who is right for you even if they work for a local non franchised company (these agents often start with the big franchise names and feel they can offer more flexibility to their clients working for a smaller local company) There is however a fine line of not working with a novice agent but also not working with the “Big Machine” agents, the ones who crank out sales left and right but wouldn’t recognize you a week later in the grocery store. The sweet spot for experience seems to be 5-20 years, 5 years is long enough to gather enough knowledge to know the ins and outs and get past the initial desperation of just making any sale to survive and agents with over 20 years seem to lose the drive it takes for this business and they may be behind on the latest technologies, there are certainly exceptions to this rule. Also it is advised to work with a full time agent, you would be surprise how many agents work part time or specialize in other sectors such as property management or home building, they may be a great property manager but marketing homes is not their “full time” job.

    Realtors in Jacksonville FLNext search like a buyer… does the same agent’s website come up for searches in YOUR area? If this agent has a firm grasp on getting themselves to appear in searches they should be able to do the same for you. Having internet marketing knowledge these days is NOT optional for a Realtors in Jacksonville Fl, if they do not have a solid internet presence move on and I don’t mean does the “franchise” have a website on the first page because they use a round robin system for leads, you want an individual agent to appear, if they can make this happen they are doing something right, 97%+ buyers are searching on the internet and postcards and newspaper ads just aren’t going to cut it. Even if you are a buyer the good properties rarely even make it to print advertising or on those big search sites like Trulia and Zillow before they have multiple offers.

    Finding  Realtors in Jacksonville FL  doesn’t have to be difficult but is necessary for a successful real estate transaction. Be sure to interview for the position and then make it known they are your agent, since this is a commission business it is important to realize that if your agent isn’t absolutely sure you are committed to working with them exclusively it is difficult for them to justify going the extra mile to seek out that property or spend the money needed to market your home.

    Recap of interview topics:

    How many years of experience?

    Do they work full time?

    Are they a Realtor in Jacksonville Fl?

    Do they work in your area, not a “tri county area”

    Do they specialize in the type of property you are selling or buying? A million dollar lister won’t give a $150k listing much effort and a $150k listing agent will be in over their head on a million dollar deal.

    What is their marketing plan?

    How many deals have they close in the last year? National average is 4, a good agent does 12-24, a top producer 50+ the sweet spot is the “good agent”.

     

    *Please note this article was targeted toward buyers or sellers in the greater Jacksonville FL area, however the information is applicable to whereever you are. Please disregard the use of "Realtors in Jacksonville Fl" keyword targeting. We hope you got some good information.

  • What sets apart the best real estate agents in Jacksonville?

    Posted Under: Home Buying in Jacksonville, Home Selling in Jacksonville  |  July 24, 2013 10:58 AM  |  307 views  |  No comments

    Best real estate agents in JacksonvilleThe best real estate agents in Jacksonville know selling a home is an art form just like a great painter it involves many skills that only come with experience and constant training. The fundamentals are easy, sign listing, place yard sign, enter data in multiple listing service, but how these things are done is the difference between 90+ days on the market with a low ball offer or solid offers in the first couple of weeks.

    Think of selling a home like a grand opening to a new restaurant…anyone who knows how to cook can start a restaurant but as anyone familiar with business knows this industry has the highest failure rate. To succeed takes months of preparation before the doors are even open, and you have one chance to wow you customers and critics. Consider walking into a new restaurant and there are no chairs, that’s kind of like listing a home with no photos or proper staging. The people who have been waiting for you to open are going to walk right back out and move on to their new favorite spot down the road.

    Enough with the restaurant analogies, I think you get the point. After selling homes for over a decade I have put together a step by step program that gets the best results and most of the best real estate agents in Jacksonville have their own marketing plans and that’s what makes them the best. In my opinion the home is sold before the listing ever hits the market, my average prelisting time period is one and half weeks. During this time a strategy is put into place to prepare the home for its “grand opening”. Often a home stager is utilized to best place furniture and make color recommendations, minor repairs are address and professional photography is done. Social media is a buzz with an impending new home listing. Blog posts are written, virtual tours are created and inviting descriptions are brought to life. During the first 2 weeks of the home hitting the market the element of surprise is on the sellers side, buyers are wowed by the impressive performance during their first “online showing” they are compelled to make an appointment for their actual second home tour, please note I said their first showing was online…home buyers eliminate hundreds of home by their online appearance and never come to view the actual property making it a case in point that the actual first “showing” is online. Once the flood of buyers rush in the excitement of this new prospect overwhelms them and they are unsure of how the competition will react prompting them to make larger than usual offers, often leading to multiple offer situations. After the first two weeks the buyers start to realize this property may not be worth the asking price or question why it hasn’t sold and are under much less pressure to outbid other buyers.

    Best real estate agents in Jacksonville

    In closing I cannot emphasize enough how important it is to make that first impression absolutely perfect because once the home is on the market your clock has started and buyers buy or move on. If you are looking for the best real estate agents in Jacksonville be sure to see if they have a step by step plan to market your home, and don’t be in a hurry to get the home on the market before it is 100% ready for buyers, it will sell soon enough and for more money!

  • Where have all of the homes for sale in Jacksonville gone?

    Posted Under: Home Buying in Jacksonville, Home Selling in Jacksonville  |  July 24, 2013 10:51 AM  |  283 views  |  No comments

    Where have all of the homes for sale in Jacksonville gone?-If you have been sitting on the sidelines the past few years waiting for the real estate crisis to end before purchasing a home you may be wondering what is going on with this market? What has everyone been talking about the last few years, there literally is no inventory. I’m sure every property you are interested in lately is either sold by the time you get there or is in a multiple offer situation. Well the fact is in the last 6-8 months home inventories have been dwindling and for several major reasons. I would like to explain to the best of my knowledge what is happening in the real estate market not just in Jacksonville but across most of the country. Here is a list of several factors.

    1. Amazingly low interest rates. Rates were so low that in most cases a credit worthy buyer was paying more in rent than owning a similar home which even if the market continued to slip they were better off buying than giving a landlord $12,000++ a year, and with prices having sunk so low it was a no brainer for most people.
    2. Previous foreclosure and short sellers are ready to come out of the penalty box. Maybe because this is my job it seems like only yesterday we went into this real estate crisis when in actuality it started in 2007…6 years ago! With the new lending guidelines a person who short sold their home 2-3 years ago and has rebuilt their credit in now eligible to purchase another home. This means the first few waves of people who lost their homes early on have been counting the days to be homeowners again.
    3. The banks have initiated several programs to rent back homes to foreclosed sellers keeping them in their homes and off of the market.
    4. Lastly but this is the MAJOR one that nobody hears about, corporations are pouring billions of dollars into the residential housing market, many backed by Wall St and the pooling of investor funds in the form of REITs (real estate investment trusts) Also smaller investor who are tired of lack luster returns from the stock market are using self-directed IRA funds to purchase or back smaller investor groups. The best case in point is a company called Blackstone which is currently purchasing billions of residential properties to hold as rentals and resell the income as securities, very similar to the mortgages that caused this issue. Here is a CNBC article explaining more http://www.cnbc.com/id/100542594

    What about all of the shadow inventory the banks are holding? Well these banks are making arrangements with these corporations to purchase large blocks of their properties and non performing notes before you or I ever even hear about them. I must hear at least twice a week from a buyer that they see foreclosed homes everywhere with overgrown yards and stickers in the windows, the fact is many of these will not see the open market, and until they do it is almost impossible to reach anyone who can give you any insight on acquiring these properties. (Trust me I have tried)

    So what does that mean for you as a private home buyer?

    I am having flashbacks to 2004 all over again, with buyers writing a dozen offers or more before getting approved, the difference now as I mentioned many properties are being purchased with cash making it very hard to compete with mortgage contingencies. The best bet is to communicate with your real estate agent and let them know you are committed to the search and to them, if they know you are a solid buyer they will work harder for YOU and keep you in mind the second they hear about a new home. They can even go after unlisted properties in your target area, let them know exactly what you are looking for. Getting preapproved for the strongest financing option available to you is also very important, if you have cash great, but if not, your next best is Conventional then FHA and VA. Also the more cash you can put down the better, a larger earnest money deposit lets the seller know you mean business.  Be extremely proactive with your house hunt, if a desirable home comes on the market on Monday you will not have time to wait until the weekend to view it, also do any due diligence on the area ahead of time, and be sure you are educated on where you want to buy so you can be confident and act fast. If the property is bank owned you will have a better chance with HUD or Homepath properties who offer the “First Look initiative” meaning a homeowner has the first right to purchase during the initial offer period, these homes may require work and often seem overpriced but if you can work with it be as aggressive as possible and consider using the financing the bank offers. HUD is FHA so use FHA and Homepath which is Fannie Mae offers the Homepath program. If the property is owned by a seller, make the offer as clean as possible, you may not have cash but you can try to make a reasonable offer and keep the contingencies to minimum, don’t make the seller jump through hoops by painting and doing repairs or excessive cleanup, they may be under a lot of stress and might really appreciate you taking the property “as-is”, again this advice is directed to high competition areas and homes, your real estate agent will be able to coach you on what is a good offer and when it’s time to move on. (There are still homes on the market that are just plain old overpriced). Lastly appeal to the seller, perhaps write a personal note or letter telling them how much you love their home and will care for it, this may work with sentimental home sellers who have lived in their home for years, it will defiantly not work for bank or corporate relocation properties.

    I’m finding many of the buyers that are now coming into the market are caught off guard and where expecting to have their pick of homes to choose from at bargain basement prices, since there has been such gloom and doom in the media regarding real estate industry over the past few years, but this just isn’t the case anymore. Our population continues to grow and people need housing, the housing industry has its ups and downs, and perhaps we will see another dip in the future, but we will most likely not see these interest rates again. So if you are considering jumping in, hopefully this has given you some insight to what is happening and why. I wish you the best in your house hunt.

  • Short sale listings must have five days in MLS

    Posted Under: Home Selling in Jacksonville  |  July 24, 2013 10:50 AM  |  243 views  |  No comments

    Jacksonville Short saleJuly 9, 2013 – Fannie Mae recently announced requirements for Fannie Mae short sales listed in a multiple listing service (MLS). Starting August 1st, each new short sale listing must maintain an “active” status for a minimum of five days; and that timeframe must include at least one weekend. Freddie Mac announced similar guidance for Freddie Mac short sales.

    “Along with our regulator, the Federal Housing Finance Authority (FHFA), we decided to take this step in response to Realtors’ concerns,” says Jane Severn, director of marketing at Fannie Mae. “We’ve had cases where a short sale property is listed in the MLS as ‘active’ and, in less than an hour, it goes into ‘pending’ status.”

    Florida Realtors’ Vice President and General Counsel Margy Grant says the requirement will change the way some members list a home in their MLS.

    “Realtors should identify any short-sale listings that would require approval by Fannie Mae or Freddie Mac,” Grant says. “If the new rules apply to a listing added to the MLS after Aug. 1, we recommend that agents put a disclaimer in MLS comments telling cooperating brokers that the seller must keep the listing active for five days, including a weekend. This disclaimer would allow cooperating agents to structure their offers accordingly.”

    Grant says it’s important to remember two things: that the new rule only affects Fannie Mae and Freddie Mac short sales; and, though it directly affects sellers, it also indirectly impacts buyers’ offers.

    “The rule doesn’t regulate the timing of an offer,” she says. “An offer can be submitted at any time – but a seller following these rules cannot accept any offer until the required five-day marketing period ends. A buyer’s agent could, for example, submit an offer on the first day a home is listed. However, they may want to include contract wording that gives the seller five days to accept the offer if the property must follow Fannie Mae or Freddie Mac’s rules.”

    Severn says Fannie Mae wants their “short sale listings to be marketed in a manner that allows the market to see the listing.” She notes that their current policy for properties Fannie Mae owns (REO listings) reflects the same philosophy since Fannie Mae won’t evaluate offers until the listing has been in the MLS and “active” for at least three days.

    Under Fannie Mae and Freddie Mac’s rules, the short sale property must be listed in an MLS that covers its geographic area, and a printed copy of the property’s MLS listing must be kept on file. If a property is located in an area not covered by an MLS, it must be advertised in a manner customary for the same period of time – at least five consecutive calendar days that includes one weekend.

    Fannie Mae announced the change in a Servicing Guide announcement in June, applicable to “Multiple Listing Service Requirements for Standard Short Sale/HAFA II.

  • June’s national home sales slip, but above year ago

    Posted Under: Home Buying in Jacksonville, Home Selling in Jacksonville  |  July 24, 2013 10:48 AM  |  300 views  |  1 comment

    Existing-home sales declined in June but have stayed well above year-ago levels for the past two years, while the median price shows seven straight months of double-digit year-over-year increases, according to the National Association of Realtors® (NAR).

    Total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dipped 1.2 percent to a seasonally adjusted annual rate of 5.08 million in June from a downwardly revised 5.14 million in May, but are 15.2 percent higher than the 4.41 million-unit level in June 2012.

    NAR Chief Economist Lawrence Yun said there is enough momentum in the market, even with higher interest rates. “Affordability conditions remain favorable in most of the country, and we’re still dealing with a large pent-up demand,” he said. “However, higher mortgage interest rates will bite into high-cost regions of California, Hawaii and the New York City metro area market.”

    According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.07 percent in June from 3.54 percent in May, and is the highest since October 2011 when it was also 4.07 percent; the rate was 3.68 percent in June 2012.

    Total housing inventory at the end of June rose 1.9 percent to 2.19 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 5.0 months in May. Listed inventory remains 7.6 percent below a year ago, when there was a 6.4-month supply.

    “Inventory conditions will continue to broadly favor sellers and contribute to above-normal price growth,” Yun remarked.

    The national median existing-home price for all housing types was $214,200 in June, up 13.5 percent from June 2012. This marks 16 consecutive months of year-over-year price increases, which last occurred from February 2005 to May 2006.

    Distressed homes – foreclosures and short sales – were 15 percent of June sales, down from 18 percent in May, and are the lowest share since monthly tracking began in October 2008; they were 26 percent in June 2012. The decline in sales of distressed homes, which typically sell at a reduced price, accounts for some of the price growth.

    Eight percent of June sales were foreclosures, and 7 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in June, while short sales were discounted 13 percent.

    NAR President Gary Thomas said some owners who were hurt by the downturn are now in the market. “Rising values have improved the position of homeowners, and 16 percent of Realtors surveyed in June report they worked with a client that previously had an underwater mortgage,” he said.

    “Of those previously underwater owners, 53 percent were planning to buy another home and 22 percent intend to rent, but 25 percent weren’t sure what they’d do. In addition, 47 percent of Realtors report they have potential sellers who are waiting for additional price appreciation before they sell,” Thomas said.

    The median time on market for all homes was 37 days in June, down from 41 days in May, and is 47 percent faster than the 70 days on market in June 2012. Short sales were on the market for a median of 68 days, while foreclosures typically sold in 39 days and non-distressed homes took 35 days. Forty-seven percent of all homes sold in June were on the market for less than a month.

    First-time buyers accounted for 29 percent of purchases in June, compared with 28 percent in May and 32 percent in June 2012.

    “First-time buyers should be closer to 40 percent of the market, but they’re held back by the frictions of tight credit and very limited inventory in the lower price ranges in most of the U.S.,” Yun said.

    All-cash sales made up 31 percent of transactions in June, down from 33 percent in May; they were 29 percent in June 2012. Individual investors, who account for many cash sales, purchased 17 percent of homes in June, down from 18 percent in May and 19 percent in June 2012.

    Single-family home sales slipped 1.1 percent to a seasonally adjusted annual rate of 4.50 million in June from 4.55 million in May, but are 14.5 percent above the 3.93 million-unit pace in June 2012. The median existing single-family home price was $214,700 in June, which is 13.2 percent above a year ago.

    Existing condominium and co-op sales fell 1.7 percent to an annualized rate of 580,000 units in June from 590,000 in May, but are 20.8 percent higher than the 480,000-unit level a year ago. The median existing condo price was $210,200 in June, up 15.4 percent from June 2012.

    Regionally, existing-home sales in the Northeast declined 1.6 percent to an annual rate of 630,000 in June but are 16.7 percent above June 2012. The median price in the Northeast was $270,400, which is 6.8 percent above a year ago.

    Existing-home sales in the Midwest were unchanged in June at a pace of 1.21 million, and are 17.5 percent higher than a year ago. The median price in the Midwest was $170,100, up 8.9 percent from June 2012.

    In the South, existing-home sales slipped 1.5 percent to an annual level of 2.03 million in June but are 16.0 percent above June 2012. The median price in the South was $186,300, which is 13.7 percent above a year ago.

    Existing-home sales in the West declined 1.6 percent to a pace of 1.21 million in June but are 11.0 percent above a year ago. With ongoing supply constraints, the median price in the West was $282,000, a jump of 19.9 percent from June 2012.

    © 2013 Florida Realtors®

  • How to buy a HUD foreclosure in Jacksonville

    Posted Under: Home Buying in Jacksonville, Foreclosure in Jacksonville  |  July 24, 2013 10:45 AM  |  358 views  |  No comments

    How to buy a HUD foreclosure in JacksonvilleHow to buy a HUD foreclosure in Jacksonville-So buying a HUD foreclosure sounds like a good idea, right? Well maybe, let discuss what you need to know and how the process works. Since HUD is a government agency they tend to play by their own rules and this can be a little overwhelming if you are not experienced with the process. This article will be mainly geared toward the owner occupied purchasers but much of what you will read will also apply to investors.

    The first thing you need to consider is you have to find a HUD registered real estate agent who is familiar with the HUD bidding process, only agents that have a NAID number register with HUD may place offers on your behalf, and do not count on using the listing agent since many are located out of town or have no interest in working with buyers since they are generally overwhelmed with their listings. Also it is advised to ask how long this agent has been working with HUD since even agents working under a HUD broker may not have any experience closing HUD deals.

    Once you have interviewed and hired your agent, ask them for a referral for a lender who is also familiar with HUD and more importantly is proficient in the FHA 203k loan process, since this is a very common loan required for these properties and again many lenders are not experienced in this complicated product. HUD also offers $100 down program, EI (Escrow Insured), and the rehab 203k loan for their properties all of which are great options depending on the circumstances.

    Once you have built your “team” and have your preapproval letter in hand, now you are ready to start the search, but first let’s take a look at what is HUD, HUD stands for Housing and Urban Development, which is part of the federal government, HUD foreclosures are typically foreclosed properties from FHA loan borrowers, FHA is also a government program known as the Federal Housing Association which insures lenders when making loans to first time home buyers, when one of these borrowers defaults the property is foreclosed and often HUD will take possession and resells the property. Since these are government agency they try to promote home ownership and therefore offer the owner occupied bidding period on most of their properties, we will discuss this further later on. They also offer incentives for nonprofit, local municipalities, teachers, law enforment officer and medical field employees to purchase these homes at a deep discount, such as the officer next door program. If you feel you qualify for one of these programs speak to your Realtor and loan officer for the best approach.

    So how do you find HUD foreclosures? That’s the easy part, all HUD homes are placed in the Multiple Listing Service just like any other listing or you can search on HUD’s website www.hudhomestore.com . When HUD homes get listed there are three listing statuses, Lottery, Exclusive, and Extended. The lottery period is when only nonprofits and municipalities may bid on the property, however in my experience this is fairly rare, the next is the exclusive which is the first 30 days of a listing when owner occupied buyer only may bid, and if the property is still available after that it converts to extended status allowing anyone including investors to bid.

    So let’s say you find a property in the exclusive status and want to make an offer, the first fifteen days are the initial bidding period, you may make your offer anytime during this period until midnight on the fifteenth day. All bids will be reviewed the first business day after the bid period (so if the bid period ends on a weekend or holiday offers will not be review until the first business day, remember we are dealing with the government) if the property does not receive offers in the first fifteen days the bids will be accepted on a daily basis until the property sells, if it fails to sell in the first 30days investor are then welcome to bid.

    What do you do if you want to make an offer? HUD uses its own forms and guidelines so your agent will have to be familiar with the process, you MUST have your preapproval or proof of funds ready BEFORE you make an offer. You will also need to provide your agent with proof of identity and social security numbers, these will be required on the contract so don’t be alarmed when you are asked for these. This is also why you will need your agent and loan officer before you start your search so you can feel comfortable and confident with the process. You will also need a CERTIFED CHECK made payable to HUD at the time of your offer $500 for up to $50,000 purchase price and $1000 over $50,000k and 10% on vacant land, both of these items, the contract and all addendums must be in your agents hands when making the offer online, if your offer is accepted your agent must overnight the entire packet to the asset manager within 48 hours or your offer will be rejected, if any part of the offer is missing or incorrect your offer will be rejected! This is where most agents who are unfamiliar with the HUD process fail their clients and loose deals. HUD is extremely strict and will cancel a deal for the use of the improper color of ink for your signatures, yes you read that right, HUD will reject an offer is you sign in the improper color ink, crazy right? You will have a maximum of 30 days for a cash offer, 45 for a finance, and 60 for a rehab, if you cannot close in time you will be required to request an extension the first is free to an owner occupied the second will cost you again this is why you need an experienced team to move the process along and delays can cost you. Also note all structural inspections and utility inspections and connections are the responsibility of the buyer (JEA will not turn on power if the service has been disconnected for more than a year without a licensed electrical inspection), and HUD will not renegotiate a contract due to structural defect.

    There are far too many details your agent and loan officer must be aware of when guiding you through the HUD buying process for me to detail here, but it is important to know that HUD has little regard for the individual buyer and if their guidelines and processes are not followed to the letter you will lose your contract and potentially put your deposit at risk. This is not to deter you from purchasing a HUD property but to be aware of the process and prepared to execute all aspects as efficiently as possible.

    For more information on purchasing a HUD property contact your local HUD real estate professional for a consultation.

    Jacksonville HUD properties for sale, Jacksonville HUD real estate agents

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