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FAQ for Real Estate Professionals Selling REO

View New Incentives for HUD Properties - Starting April 1, 2011!

1. How do you sell HUD Homes?
2 . Who can sell HUD Homes?
3 . How do I submit an offer on a HUD/REO Home? (HUDHomestore and BidSelect)
4 . What are the bidder types?
5 . How do I schedule a showing?
6 . Lockboxes and Keys
7 . How do I submit an offer on other Bank-Owned Properties?
8 . What do I do if my offer on a HUD home is accepted?
9 . How do I fill out a HUD/REO Contract?
10. Earnest Money
11. Proof of Funds
12. Home Inspections
13. How do I get Utilities turned on for my inspection?
14. Bank Addendums
15. Buyer Keys!
16. How do I Cancel a Contract?
17. What if we can't close on time?
18. Will this home qualify for FHA financing?
19. Are there other offers on the property?
20. Why is the property not showing up on HUDHomestore?
21. What if I made a mistake on my buyers legal and correct information?
22. What are the usual and customary seller's closing costs?
23. Commission
24. What are (IE) repair escrows on FHA Insurable properties?
25. Does my buyer have to use HUD's FHA appraisal?
26. What if my buyer bids over the FHA appraisal?
27. Does HUD provide surveys, inspections, and HOA certificates?
28. Can repairs or remediation be done before closing?
29. Who are the HUD designated closing agents and what are their closing policies?
30. Does HUD allow contract extesions?
31. What is HUD's exlcusive bidding period?
32. What is HUD's extended Listing Period?
33. What is "I", "IE", "UI"?
34. What are the different types of bid status?
35. What are Back-up offers?
36. What is a Counter Offer?
37. How is the repair escrow amount determined?
38. How do I determine the mortgage amount when there is a repair escrow?
39. What is a Lottery?

40. Can you tell me more about this property?

 

If you have not found an answer to your question here please send your question via email to thesellingteam@comcast.net.

 

 

 

 

 

1. How do you sell HUD Homes?

Selling Paradise Realty now regularly offers a training session called Successfully Selling HUD Homes. These training sessions are free and open to all real estate professionals. You will come away with every thing needed to market yourself as a HUD home expert.

Selling Paradise Realty is a HUD Local Listing Broker and we have the information you need.

 

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2 . Who can sell HUD Homes?


Any licensed real estate broker registered with HUD and has an active NAID, or an agent employed by a registered broker, may show and submit bids on behalf of purchasers. Brokers and agents can check their current NAID Registration Status at the HUDHomestore.

To obtain a NAID number Register at HUDHomestore. The principal broker (Selling Broker) must register and receive a NAID. You can find the required forms, SAMS 1111 Broker Application and SAMS 1111A Selling Broker Certification, and NEW mailing instructions on the NAID registration link. Be sure to mail the forms to the correct address listed for your state’s HUD Homeownership Center.

Click here to complete the forms.

 

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3 . How do I submit an offer on a HUD/REO Home?

All bids, on all HUD owned properties nationwide must be placed at www.HUDHomestore.com. Only HUD registered brokerages may show, sell, and receive a commission on a HUD owned property. State real estate contracts and addendums (this includes FHA Amendatory Clauses & Real Estate Certifications) may NOT be used or incorporated into any HUD contract. Only HUD contracts and addendums may be used and should be fully executed (IN BLUE INK ONLY) and in the possession of the selling agent, along with proof of cash/prequalification letter and certified escrow funds, BEFORE the bid is placed on HUD Homestore. Offers may NOT be faxed or emailed to the Local Listing Brokers. HUD contract packages can be found www.hudpemco.com, click on the appropriate package for your buyer. Fill out the form online and print.

Once you have completed your contract your bid must be placed online at www.HUDHomestore.com. Bid results and statistics are not placed on the website. Only winners are notified via email of their winning bid status. We are not able to give you status updates on your bids or contract packages, nor can we disclose how many offers are currently on the property. Ratified contracts can be expected via email within 7 to 10 business days. Selling brokers that have been asked to make revisions can expect a slightly longer turn-around timeframe.

To place your bid you must go to www.HUDHomestore.com. You must be registered to place a bid. Once you are registered on the site, locate your property and view the Property Detail screen, click the “Submit an Offer” button on the lower right corner of the Property Details screen. Enter the requested NAID/license information and click “Verify NAID” to get to the Bid Submission page. Answer the questions according to the completed contract package to complete the form and click “Continue.” Review the Bid Summary page, accept the terms & conditions and click “Confirm This Bid” to submit. Retain the confirmation number to log back in and track the status of the bid.
*Print the bid conformation for your records, you will not be able to access this later*

Placing a Bid on BidSelect

To place a bid on BidSelect you must go to www.bidselect.com and creat a Buyer Center Account. Search for the property you wish to bid on and select the "Submit Offer" button on the lower right corner of the screen. The status of the property and whether or not bids are being accepted on the property will be displayed on the screen. Click here to watch a video with step by step instructions on setting up your account and bidding procedures.
Anyone can sign up for a Buyer Center account, from this account you will be able to do the following:

Track the status of your current offers or see all of your historical offers (for registered
brokers or agents).
Set up a watchlist to track properties of interest to you or your clients.
Save searches on properties to save time locating properties of interest.
Set up preferences to receive email listings of properties and receive email notifications
about offer status.
Print all contracts pre-populated with your information and the data you entered during
the offer process (for registered brokers and agents)

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4 . What are the bidder types?


There are five buyer types that are eligible to purchase HUD Homes: Owner Occupants, Investors, Good Neighbor Next Door (GNND), Eligible Nonprofit organizations, and Approved Government Entities.

· Owner Occupant buyers are individuals with a valid Social Security Number (SSN) who have not purchased a HUD property within the past two years as an owner occupant. An owner occupant must live in the property as their primary residence for one year and may not purchase another HUD Home for two years. Owner Occupants can bid on homes in the exclusive or extended periods.

· Investor buyers are individuals with a valid SSN or Employer Identification Number (EIN) who purchase the property as an investment. Investors can bid on homes in the extended listing phase. There is no restriction on how many properties an investor may purchase.

· GNND buyers are qualifying law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians. HUD offers a discount of 50% from the list price of a home located in revitalization areas and in return GNND participants must commit to live in the property for at least 36 months as their sole residence. HUD also requires that buyers sign a second mortgage and note for the discount amount. The GNND buyer or spouse may not have owned a property within the last 12 months, or have participated in the GNND program before. A GNND buyer must bid 100% of the listing price. GNND buyers can use any type of financing or cash deal. FHA financing: a GNND buyer must qualify for the entire purchase price prior to discount. The buyer can finance into the mortgage all reasonable and customary closing costs, including prepaids and real estate commissions. HUD will NOT pay any closing costs or real estate commissions. GNND participants must submit bids through a real estate broker licensed to do business in the state where the property is located. If using FHA financing to purchase the home, GNND buyers can purchase the home for only $100 down. FHA financing must be used for the $100 down payment incentive to apply.

· Approved Nonprofit Organizations can bid on homes in lottery, exclusive, and extended phases provided the properties are located in approved purchase areas. If the property is in the lottery phase, the home must be uninsured. Nonprofits rank below Government Entities in the bid selection process for the lottery, but above them for exclusive and extended listings. Nonprofits cannot bid for dollar homes.

· Approved Government Entities can bid on homes in lottery, exclusive, and extended phases provided they are in approved purchase areas. If the property is in the lottery phase, the home must be uninsured. Only Government entities can bid on Dollar homes.

The Property Details page will clearly define the type of bids currently being accepted and when exclusive bidding periods will end. You cannot place a bid for any other type than what is currently being accepted.

 

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5 . How do I schedule a showing?

All Showings for Selling Paradise Realty REO properties are scheduled by calling
877-894-7738. If this is a HUD property you will be asked to supply your NAID number. For all others you must provide your Agent License number. Our call center will request your email address so that we can request your feedback on the property. We appreciate your taking the time to send us your feedback. REO Sellers need to know what you think so send us your feedback! Click here to print a showing instruction sheet.

 

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6 . Lockboxes and Keys

As an REO Broker we have experienced problems with disappearing keys, purposefully jammed lockboxes, and other things that agents will do to allow only themselves access to come and go from a property while an offer is being prepared. This makes it impossible for others to gain access with a lockbox. If you are trying to show one of our properties and this happens to you, please realize how frustrating this can be. Please, clients should never be allowed access by providing them with lockbox codes and stopping other agents from viewing a property will not accomplish anything. Please don't inconvenience others by following this practice.

 

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7 . How do I submit an offer on other Bank-Owned Properties?

The MLS confidential agent remarks will clearly define how an offer is to be submitted. All HUD properties must be submitted through www.HUDHomestore.com, some properties are submitted through www.bidselect.com. Others are submitted directly to the listing broker at thesellingteam@comcast.net. Using the appropriate means to submit your offer will save you both time and frustration. Please read and follow the instructions provided in the MLS listing.

Click here for the Listing and Bidding Procedures for a HUD property.

Please be aware when the seller has not given permission, we do not have the authority to discuss the existence of other offers.

Standard of Practice 1-15 REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09)

As far as we know we may have offers, we may not. The seller may have accepted an offer and we may have not received this information. If your offer has been accepted you will be notifed.

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8 . What do I do if my offer on a HUD home is accepted?

HUD CONTRACT PACKAGES MUST BE SUBMITTED WITH:

•Proof of Cash AND/OR Pre-Approval Letter
•Certified, earnest deposit funds of $500 ($50,000 or less), $1,000 ($50,001 or more) payable to HUD
•Contracts must be in BLUE ink.
•PEMCO DAYS TO CLOSE: 45 (CASH AND ALL FINANCED OFFERS WITH ONE EXCEPTION, 203K OR STREAMLINE CONTRACTS WILL CLOSE IN 60 DAYS)

ALL PACKAGES DUE WITHIN 2 BUSINESS DAYS OF BID AWARD DATE.

Pemco Fillable Contract Package Instructions:
1.) Go to www.HUDPemco.com
2.) Click on "Forms"
3.) Click on "2A"
4.) Click on the appropriate contract package that applies to your buyer.
5.) Enter all fields as you will enter them in HUD Homestore. Click "Print".
When filled out completely, mail to:
PEMCO HUD Packages
3525 Piedmont Road Bldg 5 Suite 310
Atlanta, GA 30305
800.881.9260

It's as simple as that! Using the original contract that you filled out, complete the contract online based on the final offer you received from HUD. If you have any questions or would like a complimentary review of your contract please email your complete pdf contract to thesellingteam@comcast.net.

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9 . How do I fill out a HUD/REO Contract?

Need help filling out a HUD contract click here for a step-by-step instructional video. It's well worth your time! 80% of the contracts submitted have errors and require corrections that are sent back to the selling agent. This can cause delays in getting your property closed and is extremely frustating for both you and your clients. Do it right the first time! Get your contracts approve the first time around and move your clients towards a smooth closing. These instructions are for the final contract page only. All addendums must be filled out and signed by your buyer along with the contract!
For a complimentary review of your contract please call 239-822-6000.

If your offer has been accepted from BidSelect a contract package will be available for you to print from the final Offer Submission page as well as from your My Buyer Center account.

Click here to view a sample contract package.

Click here for a Contract Review Checklist for a Fannie Mae property.

 

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10. Earnest Money

Most banks will require a minimum of $1000 or sometimes 10% for cash offers. All earnest money must be in the form of a cashiers check – NO EXCEPTIONS. EM may be forfeited if a transaction does not close due to buyer non-performance.

For HUD properties:
Certified, earnest deposit funds of $500 ($50,000 or less), $1,000 ($50,001 or more) payable to HUD
HUD's Forfeiture and Extention Policy clearly defines the return or forfeiture of an escrow deposit.

 

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11. Proof of Funds

It is strongly recommended that your offer be submitted with a proof of funds or a preapproval letter. Corporate sellers will likely favor offers that specifically show the proposed buyer's financial capacity to complete the purchase as proposed. The pre-approval should include the amount that the buyer is qualified for, type of loan, contact information for the lender, and a current date or no more than 30 days old. Cash offers should have a proof of funds letter or a copy of a statement showing funds available in excess of the purchase price. Current bank statements or recent letters (less than 7 days old) from a bank representative are acceptable forms.

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12. Home Inspections

Any inspection requested by the buyer is intended to be only for buyer's information. Please be sure that the inspector understands this property is listed and agreed to be purchased in "as-is" condition. If an inspector/appraiser is unwilling to turn on pilot lights, main water valve, etc., it is the buyer or buyer's agent responsibility to make arrangements to have them turned on and off again. The Seller will not guarantee that utilities will be functional for inspection. The Seller won’t authorize repairs for the purpose of the inspection unless agreed to in writing.

The seller, or our company, will not approve any pre-contract inspections. Additional utilities will not be turned on, de-winterizations will not occur. Radon tests will not be performed etc. This is the purpose of the inspection contingency. Assess the property the best you can in the condition it is in (everybody else will be looking at it the same way). Negotiate a successful offer and include an inspection contingency. Then you can complete an inspection and address anything found under approved conditions in an inspection response.

Neither HUD nor the Local Listing Broker will arrange or pay for any utility activation. Selling agents are required to complete and submit Utility Activation Request Applications, fees, and supporting documentation to the HUD Field Service Managers for their approval. All utilities must be in the name of the buyer and/or selling agent for a period not to exceed 48 business hours. Outstanding utilities fees that would prohibit activation will not be paid before closing for the purpose of conducting a home inspection. Rather, the buyer will be given the option of proceeding with the home inspection WITHOUT the mechanical systems being functional. Utility activation/requests cannot be made until the selling agent receives a fully ratified contract from the HUD asset manager.

Click here to access the links to FSM Utility Activation forms for HUD properties.

 

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13. How do I get Utilities turned on for my inspection?

Question 12 addresses information on home inspections and how to activate utilites. Please reference the link above for obtaining forms if requesting utilities to be activated for an inspeciton on a HUD property.

 

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14. Bank Addendums

All REO properties have addendums. They will supersede the original state association documents or any other purchase document. Please make sure your buyers understand that they are basically negotiating terms and then the Addendum will become the contract for purchase. Such Addendums are not available until a transaction has been negotiated. The bank prepares them once the terms are agreed to. Your buyer will have a very short time (24-48 hours) to review. It is not a negotiable document. Yes... that seems unfair but that is the way the game is played. The addendum will include the agreed to terms, plus language that will state the property is being sold in "as-is" condition and some very specific deadlines. If the buyer can't live with anything they discover in the addendums, then they should tell you to tell us to cancel the agreement. If we do not hear from you and receive the executed Addendum, with earnest money, within the requested time line... we will be required to put the property back on the market. If your buyer then decides they wish to proceed, it is very likely the bank will make them renegotiate the transaction.

 

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15. Buyer Keys!

Please advise your Buyer to have a locksmith ready to change all locks immediately after closing. We do not provide keys. If a key is in the lockbox, it is a master key coded in such a way that there are probably 500 other homes it fits into and there are probably many investors and other people who have this key. IT IS UN-SAFE IF YOUR BUYER DOES NOT IMMEDIATELY HAVE THE LOCKS CHANGED. LISTING COMPANY AND SELLER WILL NOT BE HELD RESPONSIBLE FOR UNAUTHORIZED ENTRIES MADE AFTER CLOSING. Please stress this point to your Buyer.

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16. How do I Cancel a Contract?

For a HUD contract you can cancel an offer after it has been submitted, until the bid opening date. Log in to HUDHomestore.com, click Bidder Functions, and go to Review your Bids. Click the bid you want to cancel. Click the Withdraw this Bid button. A summary screen will appear, and you will again have to click the Withdraw this Bid. The bid is then withdrawn from consideration by HUD. You will not be able to cancel an offer after the bid opening date has passed.

Once a contract has been submitted and you are well into the closing process each asset manager (HUD or otherwise) has a Contract Release and Earnest Money Disposition Request Form that must be submitted with supporting documentation such as a formal lender declination before the contract expiration date. Submission of the release form and supporting documentation does not mean that the buyer will receive any portion of the escrow deposit back. Failure to submit the contract release form with the proper supporting documentation before the contract expires may result in automatic forfeiture of the entire escrow deposit at the asset manager’s discretion.

Click here for Pemco's HUD Cancelation and Release of Contract Form.

 

To cancel an offer on BidSelect
Login to your Buyer Center account. Locate the offer and click the Cancel Offer button. The offer will still be visible to the Seller, but the status will show as "Offer Cancelled". This can only be done during the bidding period by the individual who submitted the offer. To cancel an offer after the bidding period has ended, please contact the Asset Management company identified on the offer confirmation.

 

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17. What if we can't close on time?

Each HUD asset manager has a contract extension form that is required a minimum of 5 (business) days in advance of the contract expiration date. Extensions, at the discretion of the AM, are awarded in 15 day increments. Contract extensions must by accompanied by certified extension funds and a letter from the lender (if obtaining financing) or the buyer (if paying cash). The submission of an extension request does not automatically, or in any way obligate, HUD to accept or extend the contract expiration date. Additionally, the approval of one extension does not mean blanket approval for any further extensions. HUD will retain extension fees if the sale fails to close. Fee extensions will be collected and deposited with the original extension request. Funds will be mailed back to buyer after closing via regular mail from the HUD designated closing agent.

Every transaction has a contract date. If the property does not close by the contract date through the fault of the buyer/lender, per diem will be assessed on a daily basis. Please make your buyer and the lender aware of this. Per Diem clauses are a part of all Addendums required to be executed as part of the Purchase Agreement. Such per-diem penalties will be specifically identified in the required Bank Addendum. In general assume that it will be charged if the closing is delayed beyond the agreed contract date due to fault on the buyers, agents, lender or anyone on the buyer’s side of the transaction.

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18. Will this home qualify for FHA financing?

We at the Selling Paradise Realty are accutely aware of the current climate in the mortgage industry and that FHA loans are the most competive in rates and availibility. However all of our properties are "Bank owned", being sold "As Is" and most likely will not pass FHA inspections/appraisals. In additions to this, the Seller/Bank will not do the work for the property to pass inspections/appraisals. When represienting a Buyer who wants to purchase an REO w/FHA financing, you need to make them aware of the potential fall out due to inspection/appraisal issues and what this could potentially cost them (inspections and appraisal fees). This is your fiduciary responsibility as a Buyer's agent. A possible alternative would be FHA/203k. This would entail that you work with the lender upfront to have the FHA inspector/appraiser view the property before submitting an offer to see if the property could be financed by this method. An offer could then be written with 203k financing and extra time could be requested for repairs estimates and a projected closing date.

HUD properties at the time of list provide the determination of whether or not they are FHA insurable.

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19. Are there other offers on the property?

We do not provide this information at the request of our Sellers. We are not representing our Seller’s interest to take any action that will discourage offers. Our job as the listing agent is to obtain as many offers as possible for our clients. Answering this question may encourage somebody not to submit an offer. Please submit offers until the status changes in your MLS.

There are some simple things to note. Unless we have noted a property as Pending in the MLS system, you still have an opportunity to submit an offer. Just because we have an offer it does not mean the offer is good or it will be responded to any time in the near future. All offers are submitted to the seller.

HUD has instructed us not to put a property pending until a contract is fully executed. However once a property has a preliminary offer the property is removed from HUDHomestore. We understand the frustration that his may cause as no further bids can be accepted during this preliminary phase. To try and eliminate some of the confusion we move these properties to the status of active contingent and then pending once the contract is ratified. Should the property become available the status will change to active. At Selling Paradise Realty we do our best to update a property as soon as we have been notified of its current status.

 

 

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20. Why is the property not showing up on HUDHomestore?

The property is currently unavailable for bid. Either because it is in preliminary offer or a contract has been accepted.

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21. What if I made a mistake on my buyers legal and correct informaiton?

Revisions to the contract can cause significant delays. Please ensure that you have your buyer’s full, legal name(s), correct social security number(s), and type of financing. Erroneous information can result in your buyer having to produce two (government issued) forms of identification or cancellation of bid.

Pemco offers the following forms to correct a contract:
Add or remove a Purchaser
Corrections to Buyers Name/Address/Vesting

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22. What are the usual and customery seller's closing costs?

HUD does NOT pay any closing costs other than the real estate commissions, recording of the deed, and the HUD Closing Agent fee. Seller’s maximum contribution towards all closing costs is 3%. Any unused portion of requested closing cost assistance will NOT be credited or given back to the buyer upon closing.
Click here to view HUD's Closing Costs Form - H2005-12

 

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23. Commission

At the discretion of the corporate seller, the buyers agent commission (BAC) may be paid on the net sales price, not the gross. New enforcement of Realtor Association rules requires us to offer a minimum BAC. You will have the option of choosing to instead receive what the bank pays under their specific terms. The BAC offered on the MLS listing sheet is nothing more than an estimate of what will be paid. The cooperative commission offered may be accepted by a selling agent, or you may choose to accept what the bank offers. In general the alternative buyer agent coop is calculated on the net purchase price and will not be paid if buyer is also the selling broker. It averages around 2-3%. We do not know the exact amount until HUD's are prepared.

At this time, HUD is offering a 3% commission OR a flat fee of $1,250, whichever is greater, to the listing broker and the selling broker on all HUD owned properties. There is currently a selling bonus offered of $500 ($25k-75k), $750 (75,001 - 150k), $1000 (150k +). This bonus can end at any time please check with the to insure this bonus is still available. The commission and/or flat fee may change at any time at HUD’s discretion. While the selling broker may reduce their commission, the listing broker’s commission is non-modifiable.

 

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24. What are (IE) repair escrows on FHA Insurable properties?

If a property is offered as FHA insurable with a repair escrow, the amount of that escrow will be added to the buyer’s mortgage. It is NOT a gift or seller credit at closing. The buyer may not pay it in cash at closing, nor may it be eliminated or reduced. It can only be increased up to $5,000 (including a 10% reserve) by a lender-ordered FHA compliance/mechanical systems inspection. Buyer must provide proof of loan qualification for the purchase price and the repair escrow amount.

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25. Does my buyer have to use HUD's FHA appraisal?

If the buyer is financing the property with a FHA insured mortgage, a valid contract must be ratified within 120 days of the appraisal effective date, or the buyer must pay for a new appraisal or an appraisal update. However, be clear, a second appraisal may NOT be ordered simply to support a purchase price that is higher than the value of the current appraisal. A second appraisal can only be ordered by the Direct Endorsement (DE) underwriter if there are material deficiencies with the current appraisal or the current FHA appraisal will not meet HUD’s 120 day appraisal effective date.

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26. What if my buyer bids over the FHA appraisal?

When obtaining FHA financing, any purchase amount over the current, FHA appraised value must be included in the cash to close due from buyer upon closing. It may not be financed into the loan. Further, buyer must submit proof of cash for the entire amount offered over the FHA appraised value with their original sales contract package.

 

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27. Does HUD provide surveys, inspections, and HOA certificates?

HUD does not have any previous surveys nor do they provide a current survey. One FHA appraisal, termite inspection, and lead-based paint stabilization estimate will be provided to owner-occupant, FHA purchaser’s only. Surveys, well, septic, structural, and mechanical inspections/certifications; lead-based paint remediation over $4,000; and HOA application/fees/certificates are at the sole expense of the buyer.

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28. Can repairs or remediation be done before closing?

At no time will any repairs, placement of personal possessions, or occupation of the property before closing be allowed. Selling agents are required to accompany buyers, inspectors, appraisers, etc. at every visit to the property, sign in on the sign in sheet, and ensure that the property is properly secured when they leave. Further, lender required repairs and/or remediation may NOT be performed before closing; nor will HUD allow a seller credit for, or remediate, lender required repairs.

 

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29. Who are the HUD designated closing agents and what are their closing policies?

HUD retains designated closing agents for all closings on HUD owned properties. All closings, even if your buyer elects to hire a 3rd party closing agent, must be coordinated through the HUD closing agent following their closing guidelines. HUD does not allow mail-away closings. Your buyer may elect a power of attorney but must submit the POA to the HUD designated closing agent, and lender if obtaining financing, for their approval. HUD requires 7 (business) days advance notice of a closing. This includes the receipt of closing instructions if your buyer is obtaining financing. Closing funds must be in the form of a bank wire that must be in the HUD designated closing agent’s bank account at or before closing. Certified funds on the day of closing are not permitted. If buyers elect to do a final walk-through, their realtor must accompany them through the property at least 6 business days in advance of scheduled closing date.

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30. Does HUD allow contract extesions?

Each HUD asset manager has a contract extension form that is required a minimum of 5 (business) days in advance of the contract expiration date. Extensions, at the discretion of the AM, are awarded in 15 day increments. Contract extensions must by accompanied by certified extension funds and a letter from the lender (if obtaining financing) or the buyer (if paying cash). The submission of an extension request does not automatically, or in any way obligate, HUD to accept or extend the contract expiration date. Additionally, the approval of one extension does not mean blanket approval for any further extensions. HUD will retain extension fees if the sale fails to close. Free extensions will be collected and deposited with the original extension request. Funds will be mailed back to buyer after closing via regular mail from the HUD designated closing agent.

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31. What is HUD's exlcusive bidding period?

 

The exclusive listing period is reserved for Owner Occupant bidders, qualified nonprofit organizations and government entities and may vary depending on the property’s insurability.

Exclusive Listing Period – IN and IE

· There is a 30 day exclusive listing period for owner occupants for IN (insured) and IE (insured with escrow) properties. All bids received in the first 10 days are treated as having been received simultaneously and if no winning bid is received by the 10th day, the bids are reviewed daily for the remainder of the exclusive listing period (up to 20 days) for owner occupant purchasers only.

Exclusive Listing Period - UI

· There is 5 day exclusive listing period for owner occupants for UI (uninsured) properties. All bids received in the first 5 days are treated as having been received simultaneously and if no winning bid is received by the 5th day, the property is made available to all bidders.

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32. What is HUD's extended Listing Period?

· Properties that are insurable (I) or insurable with escrow (IE) that were not sold in the Exclusive Listing Period are open to ALL bidders in the Extended Listing Period, starting on the 31st day. All bids received on the same day are treated as having been received simultaneously and are opened daily at the end of each business day.

· Properties that are uninsured (UI) that were not sold in the Exclusive Listing Period are open to ALL bidders in the Extended Listing Period, starting on the 6th day. All bids received on the same day are treated as having been received simultaneously.

 

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33. What is "I", "IE", "UI"?

These are listing codes, finance types that describe the FHA insurability of a property.

“IN” Insurable

203(b) Regular FHA Loan


This means the property meets FHA 203(b) financing requirements; no obvious repairs necessary to insure an FHA loan to buyer.

“IE" Insurable with Repair Escrow

203(b) - Repair Escrow


This means the property is eligible for a 203(b) FHA loan and that necessary repairs do not exceed $5,000.

“UI” Uninsured
This means the property requires extensive repairs exceeding $5,000. These properties are eligible for an FHA 203(k) mortgage if the required repairs and or the improvements are completed within 90-days of the closing.


“203K” Streamlined 203(k)

Limited Repair Program

FHA's Streamlined 203(k) program permits homebuyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this new product, homebuyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser.

 

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34. What are the different types of bid status?

Open: The bid has been submitted and is awaiting review by the Asset Manager. The bidder can modify or withdraw their bid.

Accepted: The bid has been accepted by the Asset Manager.

Withdrawn: The purchaser or their bidder has withdrawn the bid, and it is no longer under consideration by HUD.

Cancelled: The bid has been cancelled.

Under Review: The bid has been opened and is being reviewed by the Asset Manager.

 

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35. What are Back-up offers?

In the event that there is more than one acceptable bid received, PEMCO will award to the highest net bidder and hold back-up offers. Back-up bidders will be notified by email at the time of the bid award. The completed contract package should be completed and held by the agent until further notification. If the awarded bid cancels within 15 days (and the contract has not been ratified by HUD) the back-up offer will be contacted by email and advised to send the necessary documentation, within 2 business days of acceptance.

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36. What is a Counter Offer?

If all received bids are unacceptable, the AM may counteroffer by providing all bidders with an identical minimum acceptable bid allowing them to counteroffer with a cut-off date for submitting bids. The highest acceptable net counter-offered bid received within the specified time will be the winner. If none of the counteroffers meet the requirements, the bids will be rejected and be listed under the extending listing period.

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37. How is the repair escrow amount determined?

The FHA appraiser lists the estimated cost of repairs needed to bring the property up to minimum FHA standards. This amount is then multiplied by 110% and this amount is listed as the repair escrow amount. Example: if repairs total $1,000 x 110% = $1,100. The Repair Escrow amount will be listed at $1,100. Repair escrow ONLY applies to FHA financing – not cash or conventional transactions.

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38. How do I determine the mortgage amount when there is a repair escrow?

The DE Underwriter (FHA Direct Endorsement Underwriter) will determine the final 203(b) mortgage amount. The DE Underwriter will take into account the repair escrow amount to determine the FHA loan amount. The DE underwriter will determine this amount. Regardless of whether or not a repair escrow will be used in the purchase of a home, the lines on the Sales Contract that request the down payment amount and the secured mortgage amount should be filled in "TBD" (To Be Determined). The line associated with the length of the loan should also be filled in TBD. Please remember that the repair escrow amount needs to be filled in only if the buyer is using 203(b) repair escrow financing.

 

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39. What is a Lottery?

Properties that are eligible under HUD Special Programs are first offered to GNND and HUD approved Nonprofits and Government entities by Lottery. Eligible properties located in HUD designated Revitalization Areas and uninsurable properties located in approved purchase areas of an approved nonprofit or government entity are listed for sale for a period of seven (7) calendar days (the Lottery Period).

· Insured Single Unit Properties within a Revitalization Area - Only bids from GNND participants may be accepted.

· Uninsured Single Unit Properties within a Revitalization Area - Only bids from GNND participants, qualified nonprofit organizations and government entities whose approved purchase area covers the location of the property, may be accepted. In the event of competing bids from the aforementioned groups, the order of preference is as follows: (1) potential GNND Program participants; (2) government entities; (3) qualified nonprofit organizations.

· Uninsured Multi-unit properties within a Revitalization Area - Only bids from approved nonprofit organizations and government entities whose approved purchase area covers the location of the property may be accepted.

· Uninsured Properties in a non-Revitalization Area - Only bids from approved nonprofit organizations and government entities whose approved purchase area covers the location of the property may be accepted.

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40. Can you tell me more about this property?

What you see is what you get. There are no previous inspections or answers as to why a property has either not sold or come back on the market. All properties are sold as is. We highly recommend that you encourage your buyer to obtain a home inspection. However please make them completely aware that no repairs will come from their inspection it is for informational purposes only.

Hudhomestore provides a PCR or property condition report, available on the property detail page under the addendum tab, that will give you some basic information that was found when the property was inspected. There is no more detailed information than this available, your buyer will have to obtain a home inspection to find more conclusive data about the condition of the property.

 
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