Birmingham is certainly known for its upscale downtown, incredible restaurants and it's wonderful neighborhoods. We have pricey real estate here too, compared to much of the rest of the region.

On Inauguration Day, I showed Birmingham's only HUD home active in the MLS. To date, there are have been few HUD homes in Birmingham, but we could have more in the future.

My investor client asked me, "Aren't HUD homes in bad areas?" This seems to be a common perception, but HUD homes are the product of people who had FHA guaranteed mortgages losing them to foreclosure. 2009 FHA loan limits for Oakland County are up to $273,700, and we certainly have many homes in that price range in Birmingham.

FHA loans have allowed people to get into homes with lower down payments, and have been of particular assistance to first time home buyers. In the last 9 years we didn't see that many FHA loans financing Birmingham/Bloomfield Hills homes. It was much more common to do a piggyback loan, with a first mortgage and a second mortgage to avoid PMI. Piggyback loans gone now that underwriting guidelines have tightened up.

HUD homes are sold via incredibly transparent on-line auctions, which frees them from some of the issues that have surrounded the sales of other foreclosed homes. The bids are made through HUD approved brokers (like us), and the auction results are posted daily.

Owner occupants are given preference and may bid earlier in the process, without competition from investors. Investors also need to conduct any inspections prior to making an offer. Owner occupants are given much more leeway in this regard.

These homes provide an incredible opportunity for buyers, though one should proceed with caution.

This post appears from miOaklandCounty.com