HUD Foreclosures in Columbus Ohio

HUD FORECLOSURES IN OHIO

 

What does HUD Foreclosure mean? Many buyers are talking about purchasing a HUD home, but few understand what they are. I have represented buyers on the purchase of HUD homes for many years. I have also purchased HUD homes for my own investments.

 

HUD stands for the department of Housing and Urban Development. FHA stands for the Federal Housing Administration. FHA has backed over 35 million loans since 1934. If you default on your FHA mortgage then HUD is required to buy out the loan from the Bank who lended the money. The house is then listed for sale by a local broker who works with HUD.

 

How can you make money on HUD homes?

 

HUD houses are only available to owner occupants for the first 10 days. After this point it opens to investors. Having purchased a HUD home, I know firsthand the money that can be made on these properties. Often times the property is listed well below normal houses, and then they will routinely accept 10% lower. On average my clients will pick up a property at 30 to 60 percent off. Most properties will require a rehab, but some properties just need a little TLC. Visit my website at www.CRMHOMES.COM to request a list of HUD homes.

 

Why is an FHA loan in high demand?

 

Unlike conventional loans, FHA-insured loans require small down payments. With the recent mortgage crisis, conventional lenders are requiring more money down than just 2 years ago. There is more flexibility in an FHA loan than conventional loans in calculating household income and payment ratios. The cost of the mortgage insurance is passed along to the homeowner and typically is included in the monthly payment. In most cases, the insurance cost will drop off after five years or when the remaining balance on the loan is 78 percent of the value of the property-whichever is longer.

 

Who can buy a HUD homes?

 

Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

 

 

There are many inside tips to buying HUD homes. You should meet with a licensed real estate agent who has experience with this type of purchase. HUD homes have special rules and regulations that don’t pertain to normal real estate transactions in Ohio. Shoot me an email to Chad@CRMHOMES.COM with any questions.

 

Chad Miller

Prudential Calhoon Realtors

Cell#614-264-9257

Fax #866-217-6172

www.CRMHOMES.COM

Chad@CRMHOMES.COM

 

Next post: Bank Short Sales #3

 

 

 

 

 

 

 

 

FORECLOSURE, HUD FORECLOSURE, SHORT SALE, REO’S IN COLUMBUS OHIO PART 1

WHAT DO THESE TERMS REALLY MEAN?

 

The word Foreclosure has been getting more and more use over the past 2 years. The only problem is that many people misuse the word and are confused when it comes to buying a foreclosed house. They get on the internet and think they are going to find a great deal. I know because I thought the same way 5 years ago!

Don’t go to Realty Trac (A foreclosure website) and think you are going to find anything worthwhile. I used that site to find a foreclosed house in Grandview. When I went to the property I was surprised to find out it was for sale and had an open house being held. Realty Trac listed the house at $138,000. I picked up a new flyer from the agent and it was listed for $183,000! Not such a good deal anymore.

What happened?

County Foreclosure:

When you don’t pay your mortgage the Mortgage holder will file a Foreclosure action with your local county’s Sheriff’s Office. They give you 5 weeks notice for the sale date. The county will send an appraiser to put a value on your house for the sale. The bidding on the foreclosed house will start at 2/3 of the appraised value. When you see houses on a foreclosure website they will use the appraised value. A low percentage of properties actually get sold to anyone but the mortgage holder. They often times buy the property from themselves at the opening bid of 2/3 the appraised value. If anyone bids against them they will drive the price up. I have had many people tell me they can’t believe the house down the street sold for such a low amount. Most likely nobody bid against the bank and it sold for an amount that doesn’t have any influence on what somebody would pay on the open market for a similar house.

A typical example would be a house appraised at $200,000. It might be assessed by the county for $235,000. It is run down and needs work so the county appraised the property for the purpose of the current value. The bidding will start at $133,333. If nobody bids against the mortgage holder then it sells for $133,333. If someone does bid it might sell for $200,000. The buyer gets a good deal, but not a great deal. The mortgage holder will then list the property for just under market value of $235,000 and try to recoup their $200,000 that is owed on the mortgage. Increasingly the bank will be owed something like $250,000 and they have to write down $100,000 because the market has dropped, the owner is no longer caring for the property and they refinanced the mortgage with an inflated appraisal.

I was mislead by the website thinking the property was currently for sale when it had hit the Sheriff’s Auction months earlier. By the time I made it to the house, the mortgage holder had already listed the house for $183,000.

Unless you are a very experienced investor you should avoid the Sheriff’s auction. You will need between 10% and 100% of the purchase price in the form of a cashier’s check. If you are the winning bidder you will put the money down and have between 3 and 30 days to come up with the balance. If you can’t get a loan on the house you will lose your deposit! You can’t even get into the house for inspections. The auction is very risky and you should be very experienced before you attempt a purchase.

  

 

 

 

 

 

 

 

 

 

 

Next blog post will be HUD Foreclosure: PART 2