HUD Homes Explained.

HUD (US Department of Housing and Urban Development):
The largest number of government foreclosures can be found through HUD. HUD is a federal agency that implements housing policy and was created to increase homeownership across America.

Buying a HUD Home is Different than Buying Other Types of Homes
The procedures for pursuing a HUD home purchase are different than those used in buying other types of residential homes. HUD has made the procedure efficient and convenient.

Who can buy a HUD home?
HUD homes can be purchased by anyone. Homes may be purchased by owner-occupants (who have a priority bid period for 10 days), and by investors, who can then bid along with owner occupants. While many HUD homes are considered to be more affordable.

HUD homes are sold at market value.
HUD homes are initially priced for sale at the appraised market value. The buyer may offer any price, but HUD will only agree to offers that provide an acceptable return. Price reductions may take place later if the home does not sell.

Homes offered by HUD are sold "As Is".
It is important to understand that HUD homes are sold in "as is" condition. This means that the condition of the home when you see it is what you will be buying. HUD makes no warranties, does not guarantee the condition of any home, and does not verify that it complies with any local code or zoning requirements. You must make any necessary repairs after the purchase. HUD may make, or give you an allowance for, major system or safety repairs only if you are purchasing with an FHA-insured loan. It is very important that you get a Home Inspection by a licensed professional prior to closing on the sale.

Time limits are important and deadlines must be met.
Generally when you purchase another type of home, you can usually negotiate items within the contract over a period of time. When purchasing a HUD home, this is not possible. In order to be fair to all purchasers, HUD has imposed timetables that must be met or your bid or contract will be cancelled and the home returned to the market. Once your bid is acknowledged as the highest net to HUD, for example, your agent must send in a correct contract within 48 hours or the bid will be cancelled. Generally, closing must take place within 45-60 days.

How to find a HUD home.
As you search this website under 'available homes', you may find homes that have been identified as HUD homes. However, for a complete list in your area, request more information from a Real Estate One associate.

How to make an Offer on a HUD Home
All offers must be submitted by your broker through an electronic bidding process via the computer through the Internet. The electronic bids are stored in the computer system and, at the appropriate time, calculations are automatically performed to determine the apparent highest net offer to HUD.

After acknowledging the seemingly highest bid, HUD will notify the broker to send in a correct, signed sales contract within 48 hours of acceptance. If the contract is not received within 48 hours or is incorrect, the home will be returned to the market or acknowledged to the next highest bidder.

Initial Listing Period
The initial listing period, which is generally the first public listing for HUD homes, is 45 days. During this time, priority is given to owner-occupants who are buying the home as their primary residence. Priority is given for the first ten calendar days as follows:

All owner occupant offers received during the first five days of this initial period are considered to be received simultaneously. On the first business day after this period, these bids are reviewed to determine the highest acceptable offer to HUD.

If there is no acceptable bid, bids are reviewed on a daily basis for the remaining five days. Bids received at different times during the day will be considered received simultaneously, and the highest acceptable net bid will be acknowledged on the date opened. If the property remains unsold after ten days, it is made available to investors as well, and bids are reviewed on a daily basis. (Investor bids may be placed at any time but are not reviewed until the 11th day, if the property is still listed.)

An owner-occupant purchaser is defined as a purchaser who intends to use the property as his or her principal residence; a State, governmental entity, tribe, or agency thereof; or a private nonprofit organization. Governmental entities include those with general governmental powers (e.g., a city or county), as well as those with limited or special powers (e.g., public housing agencies).

Subsequent Listing Period
After the initial 45-day listing period, the subsequent listing period begins and runs for 90 days. During this time, properties are available to owner-occupants and investors. Bids are reviewed on a daily basis; bids received at different times during the day will be considered received simultaneously, and the highest acceptable bid will be acknowledged on the date opened. Price reductions may be made during this period. If the property remains unsold, it will continue to be listed.

Contract must be submitted within 48 hours
If your bid is acknowledged, your broker must submit a correct HUD Sales Contract, along with other required forms and Addendums signed by you, to HUD office within 48 hours. You may be required to submit proof of financing commitment or cash to close, along with other items. You should be working with your broker to put the required items in place before you bid on a home, so that you are ready when the time comes.

Closing on a HUD Home
Closings are generally within 45-60 days and held at the closing agent office. After your contract has been received correctly, it will be signed by HUD’s representative on behalf of HUD and returned to your agent along with a contract acceptance letter. The letter will give you up to 60 days to close. Once you are ready to close, you and your agent must schedule the date with the closing agent indicated on the letter, who also receives a copy of your contract. HUD’s representative does not set the closing date; it is up to you.

If you use the HUD closing agent, HUD pays their fees. You may use your own closing company, but then you must pay the fees. If you use your own closing company, they must work with the HUD agent on some legal items.

HUD will pay some closing and sales commission costs
Generally, HUD will pay up to a certain percentage of a broker's commission cost. In addition, HUD will pay up to a percentage for standard closing cost items (excluding the closing agent fee which is paid for separately). These items are designated by the buyer and may include discount points, loan fees, title costs, surveys, and other items. HUD will also generally pay any outstanding seller costs such as outstanding tax or utility bills which relate to HUD's ownership. You agent will know commission fees for your area.

Return of Earnest Money
There are specific requirements for earnest money deposits when purchasing a HUD property. When you submit a contract, you must deposit earnest money with your agent, usually in an amount of $500 or $1,000. If you know your transaction will not close, your agent must notify the management company as soon as possible so the home can be returned to the market. You may have to forfeit all or part of the earnest money if the sale does not close. If the sale is to an owner-occupant and does not close due to circumstances beyond their control, the money may be returned. Please review the earnest money policy for your area with your broker before you place a bid on a home.

Time Extensions
There are certain circumstances that may allow an extension of time. Extensions for time to close may be granted, in 15-day increments, under certain circumstances. Extensions may be granted at no cost to owner-occupants under certain circumstances that are beyond their control, such as a delay in financing approval that is not due to the buyer. Extension fees may be charged under other circumstances, and for investors. Extension requests must be submitted to the closing agent (not HUD) in writing prior to the expiration of the original closing date, and accompanied by a non-refundable fee, in certified funds, if a fee is required. Contact your closing agent for more information on this process.

Check out this video of HUD Homes now available in Michigan.  These homes are featured in our Full color, full page Detroit Free Press ad this Sunday too!

Michigan Home Search 

Join Our Team

Join Us On Facebook

Chat with us LIVE

Real Estate One's 1st to Know Program, A Year Later

A little over a year ago The Real Estate One Family of Companies rolled out a new program called "1st to Know".  This program offers email, text and toll free capabilities to the public for access to up to the minute information on real estate listed by REALTORS in the state of Michigan. While some of the technology may be advanced for the average home hunter, the uses are limitless to have this kind of tool at our fingertips...For the public as well as the  real estate professional.

I'd like to break down the program into parts and explain each:

• Email
• Text
• Toll Free Call
• Mobile Web

1st to Know Email is a service that searches properties from any companies in all Michigan Multiple Listing Services.  By visiting the website you can sign yourself up for the service for free and create your own searches.  You will be notified of properties matching your searches by email as often as you choose.  In addition to property searches you can also save favorite listings, make notes on listings, rate properties and set price trackers to be notified of reductions when they happen!

1st to Know Text is for SMS/MMS enabled phones.  You can text the word MYINFO to 59559 and follow the instructions to retrieve instant information on any home listed by a Realtor in the state of Michigan.  It is like having the MLS in the palm of your hand. Standard text rates apply.

1st to Know Phone enables anyone with a cell phone to listen to details about any home and receive text messages and pictures. Dial 800-840-5555 -- Press 1 -- Enter the HOUSE NUMBER.

1st to Know Mobile offers http://www.mihome.mobi/.  A mobile home search website for handheld devices.  Also offered are apps for the iPhone and Android.

These tools are unrivaled by their efficiency and offer solutions from the beginner to the advanced technology user.  When you sign up on our website, you may choose to connect your account with your Real Estate One Family agent so they can best serve you in your home search.  We are happy to offer these tools and many others to anyone interested in Michigan Real Estate.  Visit our website for full details: http://www.realestateone.com/.






Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE

Are YOU Ready to Buy a Home?

Getting Started


Buying a property can require a considerable amount of research and time. One of the keys to making the home-buying process easier and more understandable is planning. In doing so, you’ll be able to anticipate requests from lenders, lawyers and a host of other professionals. Furthermore, planning will help you discover valuable shortcuts in the home-buying process.

As you begin your search, keep in mind these key steps.

Step One: Determine if You Are Ready
One of the first questions to ask is whether you are ready to buy. If you are renting, some will tell you that your rent money is going down the drain, that you can pay close to the same for a house payment and actually make your money go toward something (equity or value in the home). While cost of renting vs. buying is a definite consideration, you should consider all aspects of home ownership to determine if now is the right time to buy.

• Why do you want to buy?
• Do you know what your want?
• Are you planning to move to a new community due a lifestyle change or is buying an option not a requirement?
• What would you like in terms of real estate that you do not now have?
• Do you have a purchasing timeframe?
• Do you have the money? for financing? the downpayment? closing costs?
• Can you afford the costs of home ownership? maintenance?
• Have you weighed all of the pros and cons of home ownership? 

Whether you decide to take the step to home ownership, the more you know about your financial capabilities and the real estate market, the more likely you are to effectively define your goals.

Step Two: Loan Pre-Approval
Before you begin to seriously shop for a home, it makes sense to know your price range or just how much home you can afford. It is beneficial to find the amount of money you can borrow prior to your house search, otherwise you could be spending time and effort looking for a house that does not meet your affordability level. Often the first step a real estate agent will take is prequalify you for a loan. This might be a ballpark figure or estimate based on typical loan setups, or you may formally apply for a loan and become preapproved. You can enhance your buying power by getting pre-approved or pre-qualified.

Step Three: Make a Checklist for Buying
You’ll save yourself many hours of shopping if you narrow your home search and make a list in advance of the features you must have, would like to have, absolutely do not want and would prefer not to have. Start by using basic measures such as general location and affordability, then you can refine your search and focus on homes that offer the most desirable features.

Location is crucial. The choice of area or neighborhood depends on your own particular needs and tastes, some of the following may be important to consider: quality of schools, property values, safety, traffic, future development, and proximity to schools, hospitals, shopping, parks, beaches, theaters and other public amenities. A desirable location can make all the difference if you anticipate reselling the home within a few years.

Style of Home. Once you’ve settled on the “where” it’s time to consider what type of home. There’s a wide selection of homes out there — which is one is right for you? Depending on how much maintenance you want to do, how much privacy you need, or if you want something custom built to suit your particular tastes, each home type has its own features and benefits. Single family home, multi-family home, condominium, ready-to-move-in or fixer-upper, depending on the different stage of your life — whether you have children or are retiring — one type of home can be more attractive than the other.

Wants vs. Needs. Beyond determining number of bedrooms and baths, you search should focus on features which are absolute requirements and those amenities you’d like to have if possible. Homes meeting basic needs may well represent radically different designs, commuting distances, lot sizes, tax costs, interior dimensions, and exterior finishes. Consider your priorities and if you can’t get a home at your price with all the features you want, then determine which features are the most important. Consider too, your needs in years to come.

Step Four: Search for Homes
With the abundant choice of housing options in the market today, the challenge becomes finding the property which best meets your needs. Consumers have access to more information today than ever before. The Internet has become a great resource for finding out about recent home sales prices, market trends, homes on the market, neighborhood/area statistics and the home-buying process.

We make it easy! Real Estate One offers home buyers the most efficient way to search homes in Michigan through 1st to Know. Register to receive automatic email alerts on properties that meet your specifications as they become available for sale.  We also have a texting program, text "MYINFO" to 59559.  The system will walk you through obtaining instant info on any listed home in the state of Michigan delivered straight to your smartphone.

The search can get complex so you should maintain a file with information on each of the homes you like. Rather than rely on memory, make notes about the homes you visit and review these to help you start narrowing down your choices.

Step Five: Choose a REALTOR(R)
Buyers are looking at a moving target in a marketplace that is never static. Researching recent sales and the price of properties on the market should give a good indication of property values and an understanding of the real estate market in the area which you are looking. It is important to know as much as possible about the choices in preferred markets and the best way to do that is by working closely with an experienced professional. A Real Estate One sales associates can help you through the home buying process from start to close. They can:

• Help you determine how much you can afford when purchasing a home, as well as recommend lenders and work with lenders on your behalf to prequalify you for a loan.
• Provide detailed information on all homes listed for sale in the Multiple Listing Service (MLS). While you can find houses on your own by searching online, looking through the real estate section of the newspaper or attending an open houses, an agent is the best source for complete information on all homes, including how long a home has been on the market, its features, the neighborhood and school system, and more.
• Help you narrow your search and arrange showings for houses of interest. By making note of what you like and dislike they can help you find the ideal match for your specific needs.
• Answer questions about the current market, interest rates and other home buying concerns. As your source for information, an agent can also refer you to other specialists whom you will need, including a home inspector or a lender.
• Negotiate on your behalf when you when you are ready to make an offer on a house. Your agent can assist you in determining exactly what to offer, not only in price but also in other factors affecting the purchase. The agent will write up the offer and present it to the seller’s agent.
• Guide you through the buying process making sure all of the necessary steps are completed, such as securing a loan, getting an inspection, completing a title search, and finalizing items right up to closing on the deal.

Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE

May 2011 Metro Detroit Real Estate Market Update

It has been quite a while since the statement "things are remaining the same" was a good sign, but for Metro Detroit real estate it is. Available home inventories continue to decline and the rate of sales are holding near the same annualized pace as last year, with the average price per square foot on the rise. There certainly is a chance of a double dip market decline, but with the current buyer activity levels and reduced inventories, that does not appear likely.

Saleable listings and discounted bank owned properties are getting multiple offers and selling quickly. With so much activity focused on those segments, the best opportunity for bargains are homes that have been sitting on the market. Many are actually priced within their saleable range, but in outdated or poor condition. Using FHA 203K loans, a buyer can find a diamond in the rough, get a loan to cover the repairs and get a home at a great price.

For buyers, with the most popular homes selling in days, it is important to understand the rules of the road when working with competing offers.

• Be ready to move quickly

• Be pre-approved for your mortgage

• It is now officially OK to offer above asking price for the right home

• Be ready to bridge the gap between your agreed upon price and the appraised value (because the next guy will if you don't)

• Be sure to date and time stamp your various counter offers to ensure a backup offer does not slip in.

This average sale price trend chart shows that prices have for the most part stabilized. So for sellers, it is important to reinforce last month's suggestion that now is the best time to test the market if you are considering selling your home in the next 12-24 months.

I've heard an interesting economic theory recently, that the combined buying power of all of the former and current homeowners who are no longer paying their mortgage is the hidden growth engine driving our economic recovery. That may be exaggerated, but I don't think too far from the truth. Over the next few years, as those former homeowners repair their credit, there will be a large wave of additional buyers re-entering the market.

In company news, Real Estate One remains the most viewed broker website across the state according to the latest Hitwise report, giving sellers the best possible exposure among companies in Michigan. Also, the new features in our 1st to Know customer web portal are catching on as well. Sellers can follow up to five different markets, watching homes for sale, sold prices and market trends within each area. It is a great and quick way for both buyers and sellers to keep a pulse on their target market areas.



Source: MIRS, Realcomp, AABOR, TAAR

Months Supply Inventory is the current rate of sales to sell existing home inventory

*Includes Hamtramck/Highland Park **Incl Eastpointe/Harper Woods ***Incl Grand Traverse, Antrim, Leelanau, Kalkaska, Benzie Counties

Job Opportunity
Michigan Home Search
Join Our Team

Chat with us LIVE

May 2011 Michigan Real Estate Market Report

April 2011 Michigan Real Estate Market Update by Dan Elsea

The April Michigan real estate market continued to show the strong activity level just as we had seen during the first quarter. The actual rate of sales on an annualized basis did slow however. It is too early to tell if that change is significant, it could have been weather related. Compared to last April, real estate sales in Michigan were off about 15%, but last April was a peak tax credit month, so a 15% decline is not as bad as it may seem and is certainly not unexpected. In most every metro Detroit real estate market we continue to see six year lows in the Months Supply of Inventory (MSI). The cause of this may be that some of the growth slow down from March to April was simply there were not enough salable homes available on the market to purchase.

Even though home values appear to be strengthening, Sellers will still need to set their prices based on the most current sales activity. A home that was on the market last year at $75,000 over the then current market will still be overpriced today. Home values are bouncing off the bottom of actual comparable sales, not what the asking prices have been. We don't expect prices to jump dramatically (tough appraisal standards will keep a check on that) but there could be some nice bidding wars for well priced and conditioned homes bringing prices off their bottoms from last year.

Another thing to keep in mind is that buyers are still being very picky. Homes that are not updated or in great condition are still sitting on the market or going for below asking price. If possible, a Seller might consider using a FHA 203K rehab loan as a refinance to help fund their updates for a more salable home.

Lately there has been an issue that has gotten some press called the MERS (Mortgage Electronic Registration System) foreclosure problem. The core issue is the willingness for title insurance companies to write a title policy on bank owned homes that used MERS in their foreclosure process. It is too early to tell if this will be a significant issue but there have been a few banks that have taken their homes off the market until they can determine their title insurance status. It may have the effect of squeezing the available home inventory even further and in some cases causing a postponing or canceling of a sale if title insurance cannot be provided to the buyer. For current Sellers it would be a good idea to have your old title policy handy just in case there was a MERS foreclosure in your title history.

Great advice is to be sure you've done your homework prior to an appraisal. Research your comps, including pending sales and be prepared to walk through them with the appraiser at the property. With so many of our strong listings selling at or even above list price, appraisers will find it tough to keep up with the market without our help. Also, it is a great idea to council Home Buyers on the most active listings that they will need to make up the difference between the agreed price and the appraised value if they want to win the bidding war on the home.


It is tough to tell just how much of the increasing activity could be a temporary spike vs. a permanent market uptick. We are certainly one of the strongest real estate markets in the country. Regardless of which it might be, the strong activity makes this the best time to have your home on the market since 2005! So for anyone who is considering selling their home in the next 12 months, act now and act fast. Demand is rising, inventories are low as are interest rates.




Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE

SE Michigan Real Estate Market Overview Through March 2011

The link below will take you to a comparison for the number of closed transactions by county (Macomb, Livingston, Washtenaw, Oakland, Wayne and within the city of Detroit) and price range over the past four years. The charts as a whole show an interesting trend of the under $100,000 price range closed activity is dramatically shrinking with the exception Macomb county, which has experienced a small increase.  You will notice some great news in Oakland County where all price ranges OVER $250,000 are up and all UNDER $250,000 are down.  That is definitely a positive sign for the Michigan real estate market.  A similar trend is happening in Washtenaw County with the $300,000+ market seeing a nice increase in closings while the lower ranges are not as consistent, some are up while others are down. As a contrast to the Detroit Metro Area, all price ranges within the City of Detroit are showing a decrease in closed transactions over this same time period in 2010.  Could this decrease in the city of Detroit be due to a lack of inventory? Will the good news continue? Only time will tell.  Check back often, we will keep you posted.

Market Graphs through March 31, 2011

 

Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE

Michigan Real Estate Market Update

The first quarter of 2011 has been an interesting ride with home buyer activity at a pace not seen since 2004. Many indicators show that Michigan is actually leading the rest of the country out of the recession, boosting consumer confidence and housing interest.

Looking at the months supply of housing inventory (MSI) gives us a good indication of why the Michigan real estate market has felt so frenzied (MSI of 0-3 months = Sellers Market, 4-6 months = Neutral, over 6 months = Buyers Market). We have been in a Buyers Market for nearly 6 years but in a short period of time we have moved from 8.3 MSI in December to 4.6 months in March and under 3 months for bank-owned for Southeast Michigan!

Within those numbers is a growing housing quality issue. For a percentage of homes where the mortgage has exceeded the market value there has not been an incentive to update, upgrade or even maintain. The result is a higher percentage of homes for sale that are less desirable since they may be dated or require significant work, even if they are not bank owned. So when you factor in the quality of the current housing inventory, the overall market number of saleable homes may be closer to 3 months MSI.

The following chart shows how the market has shifted from 2009 to 2011 in terms of the number of homes for sale and the rate of sales.

It is not hard to see the forces of supply and demand at work over the past three years.





Increasing sales and decreasing inventories have created the multiple offer situations we have seen in the last 90 days. As strange as it sounds, we have a significant shortage of saleable homes for sale.

Does that mean prices are rising as well? Not really, conservative appraisal standards will still hold back values to some degree and at this point in the early stages of our recovery; increased activity translates into a faster sale, but not necessarily a higher price. So pricing still needs to be aggressive to attract attention. But it is clear that for sellers it is the best time in the past six years, with demand exceeding supply, to try the market.

The best advise for a buyer is to be very flexible and willing to act quickly, hesitation will be costly. As prices begin to firm up, buyers will need to shift their mindsets from making deep discount offers to working within the range of the asking prices.

So with all these good signs, what can slow things down again? There has been some conversation about a real estate double dip and in fact Detroit was named as a double dip market (we have not seen that in our data). Increasing gas prices and in general a slowing of consumer confidence will keep a lid on growth. Also the number of bank owned homes being released to the market could have a negative short term affect, but positive in the long term. There is also a large backlog of homes that have been leased because they were not able to sell which, if placed on the market in high numbers, could slow the recovery.

Any market that changes direction, in this case in a positive way, gives off confusing signs to both sellers and buyers, so remember the weirder it gets the better it is for home ownership and home values!



Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE

Home Ownership 2010/2011

Michigan Home Search
Join Our Team
Join Us On Facebook
Chat with us LIVE