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Don' t you just Love HUD!!!

By
Real Estate Agent with Eagles Wings Realty

We had a signed contract for an online HUD home. Well qualified buyers ready to move forward and a signed contract. Of course we did not get any information from HUD until the offer was executed and then they sent some disclosures.

We were ready to meet their stringent deadlines for inspecction etc. and were moving forward.

Now comes the fun----the management company sends the form to OK the inspection and turn on the utilities, of course at the buyers expense, that's OK until we read on further.

They will not allow the water to be turned on to test the plumbing and water lines, they suggest a pressure test; only will cost the buyer $280 to do.

They are willing if we can turn on the water if it is successful because the Mortgage Companies appraiser has got to have the water on to do the appraisal. No way Jose says HUD. To bad for the buyer they will not allow the water to be turned on.

Well we found a full inspection report with the water on from March 2011, the noted a leak at the drain valve on the hot water heater, the plumber said we could take care of it and test the system with the water on; HUD no way will we let the water be turned on even with a pressure test and an inspection from March.

Unfortunately for our buyer we had to terminate, no water no appraisal, no appraisal no loan.

I just love the  way the system works, don't worry, it's our money anyway.

Who else is having so much fun you can't stand it?

 

Check out Part 2 for an update.

 

I'm convinced that I Love HUD Part2

Posted by

___________________________________________________________________________________ 

Eagles Wings Realty, Montrose, Colorado

In the Heart of the San Juan Mtns. in Southwest Colorado

www.Montrose-colorado-realestate.com 970-901-0434

Home of the Black Canyon National Park, The San Juan Mountains, unlimited recrecational  opportunitys, Mtn. Biking, Hiking, Golf, Fishing, Camping, White Water sports, Hunting

 "too many things to do, not enough time"

The information contained in Nick's blog is deemed reliable but is not guaranteed, and the opinions and views expressed in these articles are solely those of the author.

_________________________________________

For information on Distressed properties contact us at Nick@ZappaTeam.com

 I appreciate hearing from you!

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Comments (57)

Sylvia Jonathan
Coldwell Banker Platinum Properties - Irvine, CA
Broker Associate, SFR

Why would your buyer even bother with HUD properties???

Jun 25, 2011 05:32 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Great post and thanks for the info.  I closed a HUD about 3 months ago and my buyer refused to get an inspection - AMAZING.  So because of this I didn't know about the water issue.  The weird thing is that the listing agent was told he had to personally be there to open the doors, not provide keys so that we could change the locks.  But I didn't find this out till I arrived at the house after the home funded and recorded to find no lockbox and no keys.  We waited for 3 hours for the listing agent to show up.  By the time the listing agent arrived the sun was setting.  I had another appointment and had to leave my client there to change her own locks.  She did it, but I'm sure she wasn't thrilled.  We weren't told any of this prior to the closing. Crazy!

Jun 25, 2011 05:40 AM
Tim Bradley
Contour Investment Properties - Jackson Hole, WY
Commercial Real Estate Expert in Jackson Hole, WY

Ugh! We just closed a foreclosure house, but not a HUD. Getting the utilities turned on was a major pain in the wazoo, but at least they (ultimately) allowed us to do it.

Jun 25, 2011 06:01 AM
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

HUD is sabotaging their own deals by making them that much harder to qualify for.  Makes the deals great for us investors though.  If you know the formulas, you can buy HUD properties for so so cheap it is just plain ridiculous.

Jun 25, 2011 06:06 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

This would be a major problem here, as I'm sure it is in Colorado. So many homes are abandoned going into winter - and are not winterized in time to prevent frozen and broken pipes.

I used to handle Fannie Mae properties, so ran across that situation many times. The good thing was that back when I was an agent, Fannie Mae was still doing clean-up, repairs, and even cosmetic fix-ups. My REO listings were move-in ready when they hit the market.

Jun 25, 2011 06:14 AM
Jirius Isaac
Isaac Real Estate &TriStar Mortgage - Kenmore, WA
Real Estate & loans in Kenmore, WA

Here in the Seattle area, water issues around homes are the big thing, so we need to inspect for water all the time.  I cannot imajine how you can buy a house without an inspection.  Run, don't walk!

Jun 25, 2011 06:19 AM
Jayne Clement
Keller Williams Realty - Los Feliz, CA
Los Angeles Short Sale Agents

Brutal!

Jun 25, 2011 06:31 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Just did one & had to send only $150 to get the house re-winterized even though it's 80 degrees out now. Asinine behavior & a waste of the buyers money. This is tantamount to highway robbery! Anyway, I just went ahead & turned all the utilities on in my name before the paperwork was filed.  They can't have them turned off either so they will stay 'on' but 'off' until closing.

You make me think of another foreclosure I did where the listing office was absolutely adament about a pressure only test & it turned out there were 3 busted pipes in the house which they HAD to fix for the lender requirements.  I'm not sure WHY they just didn't do it?  Still doesn't make sense.  I would be suspicious again if they wouldn't let the water get turned on.

BTW the buyer only has to put $100 down so the deposit for the utilities is even more ridiculous.

Don't forget HUD spelled backward = DUH!

Jun 25, 2011 07:34 AM
Marci Yankelov
REMAX Sails - Baltimore, MD

All of the information and inspections on the properties are posted on HUD Homstore.com. Its a good a idea to carefully review the documents pertaining to the property, that home inspection that you read from March was posted when the property was listed. The site will also tell you if the property is FHA insurable.  Also, many times times the properties are already appraised and approved for FHA loans, FHA loans with repair escrow or FHA 203K renovation loans. This means they do not need an appraisal to get their loan. Not knowing what kind loan your buyer was getting its hard to say what happened. As a HUD listing brokerage we always recommend teaming up with a lender who has HUD experience, this will save you and your buyer lots of grief. If you want to play in HUD's sandbox you have have to play by their rules. This goes for us on the listing side as well, it may require jumping through hoops but it sells houses.

There is a great CE class on selling HUD homes, look for it in your area. I hope this was helpful!

Jun 25, 2011 07:53 AM
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Oh that is ridiculous! I sold a HUD home a while back and it was a giant pain. I feel bad for your buyer!

Jun 25, 2011 09:22 AM
Aubrey Kahn
Firm Foundation Home Inspections Inc - Kissimmee, FL

It is unfortunate, but most government offices and many of their employees just don't care. If they got rid of all the HUD homes then maybe HUD would have to downsize, so this way they have job security. They have no interest in getting the job done, they get paid regardless so why work hard for your money when you earn the same salary if you just sit there and wait for teh end of the day so you can go home.

Remember HUD is DUH spelled backwards.

Jun 25, 2011 12:51 PM
Steven Pahl
Keller Williams Tampa Properties - Tampa, FL
Real Estate Consultant Tampa, FL 813-319-6423

Buyer beware or screwed by our own government, not very good choices.  Off to read the update on part 2!

Jun 25, 2011 03:25 PM
Anonymous
Mark Cohen, Eyemark Realty

And now the federal government is set to take care of your health care. 

With the way the federal government runs everything else with corruption and incompetence, how can anybody, even the most ardant liberal, truly believe that we will better off with Obamacare.  It will make HUD look good in comparison.

Jun 26, 2011 05:31 AM
#50
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

It really is too bad that selling HUD homes is such a giant pain in the rear.   I know very few people that have had easy, smooth transactions with them.  It's unfortunate.

Jun 26, 2011 05:20 PM
Gerard Gilbers
Higher Authority Markeing - Asheboro, NC
Your Marketing Master

It must be dependent on the management company. I do find it rather stupid to pay a de-winterization fee of $150, a winterization fee of $150 after the inspection and another $150 de-winterization fee - if the deal goes through - in the late spring and summer months! The 72 inspection period is 3 days from midnight to midnight and cannot be shifted. 

Jun 26, 2011 07:41 PM
Peter Rozsa
Cupertino, CA - Cupertino, CA

Just remember who works for the government agencies: People who can't get a real job in a real world.

They cannot get fired (unions) so when they come to work at 8 and go home at 5, they really couldn't care less what happens in between.

They can screw things up royally and can't get sued for it.

They still get the retirement benefits (sometimes 3x their last years salary due to overtime).

They still get promoted and they still have three week vacations.

Wonderful world we live in, isn't it?

 

Jun 27, 2011 06:22 AM
Marsha Cash
RE/MAX Advantage - Stockbridge, GA

It's interesting the differences in our areas.  We don't have to have water to have an appraisal.  Thank goodness.  I had a foreclosure they wouldn't let us turn on the water because they knew there was a substantial leak.  They fixed it, just not before they listed it.

Jun 27, 2011 08:50 AM
Alan Brown
Coldwell Banker Realty - Davenport, FL
32 Years of Real Estate Experience .

Nick. I have sold 2 HUD homes here in the last couple of months, with both of them we were able to turn the water on. There is form you have to fill in requesting that the buyer can turn the water on. The form has to be submitted to the Fiels Services Office for their OK . You are allowed to turn it on at your expense for no more than 3 days and you have to give them the dates that you are turning them on for.

Both the houses I sold had mulitple plumbing leaks when the water was turned on. Both buyers on both properties were getting loans. The buyers lenders was able to use the exsisting appraisal that HUD had done on both properties, hence no new appraisal was needed and technically the utilities didn't need to be turned on in order to close. Both my buyers accepted the properties as is and closed.

I would agree with you that HUD'S system is not user friendly for the buyer or the Real Estate Agent. Oh and the other thing HUD will not pay for Title Insurance either that is up to the buyer also.

If you encounter  a HUD home that has been winterized by Field Services in this part of Colorado just know that the property has leaks. Their idea of winterizing a home is to shut the water off, turn the faucets on until no more water comes out and call it good. No blowing out the water lines and and putting anti freeze in the toilets, hence cracked pipes later. I even sent tHUD an e-mail telling them they were being ripped off by incompentent people, they sent me an e-mail back saying that they were contracted by some else. i.e. we don't care its not there problem.

Jul 05, 2011 08:33 AM
Joan Zappa
Eagles Wings Realty - Montrose, CO
Professional treatment of our clients, brings awes

Alan we did the forms, the appraisal was not accepted by the lender as it was a convenctional loan etc. etc. etc. Thanks forstopping in.

Jul 05, 2011 09:26 AM
Anonymous
Karen

We were days away from closing, already paid for appraisal and to have electric turned on, and paid to have water and sewer tested,  beautiful house, our dream home became a night mare when HUD canceled our contract after finding tax liens on the house (why wasn't this checked befor it was put up for sale?  Now, they apparently gave it back to original bank and house is now for sale again, for $100,000. more.  I would never try to buy a HUD home again! 

 

May 24, 2012 10:12 PM
#57