Tuesday
August 22, 2017

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Updated: 11 min 53 sec ago

Why I’m Running for the Board

Wed, 08/16/2017 - 14:41

Nico Hohman

By Nico Hohman

I am a 28-year-old broker-owner of my own independent real estate company, and I am running for a position on the board of directors for my local association, the Greater Tampa REALTORS®. The association has been around for more than 100 years and is over 10,000 members strong. It has been adding close to 125 new members every month for the last two years.

I am running for a seat on the board not for the prestige or the pay (which is none), nor for the tag on my resume, but because I believe in the future of my local REALTOR® board.

For me, the board should be shaped by three simple yet profound objectives: First, to educate our members to make them the most professional businessmen and women in any industry. Second, to enlist our members to support the local, state, and national initiatives of RPAC. Lastly, to engage the buying public to keep the agent as the focal point of the real estate transaction.

Educate. Enlist. Engage.

Three simple objectives. One important mission.

1. Educating our members. Give a man a fish, feed him for a day. Teach a man to fish, feed him for a lifetime.

I had come from both corporate and institutional nonprofit jobs before getting my license. Both of those fields required the utmost professionalism from me at all times. I was disheartened and slightly ashamed when I found out that real estate does not require a higher level of education standards. I found myself defending my own career because of the poor performance and professionalism of my peers. But there are things an association can do to address these concerns. First, we must encourage our members to put education as their number one priority. Our members should want to go above and beyond getting the minimum number of continuing education credits.

We are working through a knowledge-based economy now, and the agents who hold more knowledge about the transaction and the market are the ones who will land all the clients. Buyers and sellers are too sophisticated to go with the agents with pushy sales tactics or cheesy advertising campaigns.

Second, speaking as a training and hiring broker, we must encourage member brokers and managers to seek out agents who are highly educated. We should encourage them to drop those agents who don’t put an emphasis on training and learning. If there are no repercussions for poor job performance, poor peer reviews, or lack of on-the-job knowledge, then there is no incentive for agents to want to improve. If individuals don’t get  better, the group doesn’t get better.

The association can do its part by placing an emphasis on education, from the events they hold to the budgets they approve. If classes, activities, and events can’t show how they make the members better at their jobs then they need to be cut. Better education leads to better agents.

2. Enlisting member support. One of the strongest reasons the real estate profession and the idea of homeownership is as common as it is, is because of the work of the REALTOR® Political Action Committee (RPAC).

RPAC serves as the cohesive voice in county commissions, state capitals, and Washington, D.C., advocating for property ownership rights and the real estate profession. Without the contributions of RPAC to local, state, and national legal doctrines, I dare say the real estate transaction and industry would look unfamiliar to that of today.

Yet, with all of the great work done by those fighting for our rights as business owners and property owners, less than a quarter of the members of our association choose to support these efforts. For some agents, they might not know what RPAC does. When I first started as an agent, I certainly didn’t know what RPAC was. That excuse can quickly be remedied by my first objective: educating our members. Once I knew of the benefits of RPAC, I quickly became a supporter.

For some agents, they might feel disenfranchised by the whole legislative process. Sometimes it seems like lawmakers only make the news for their lack of getting things done or doing things that are scandalous. But lawmakers do introduce and pass legislation that has a major impact on our daily lives all the time. Issues like capping estoppel fees, removing sales taxes from service providers, keeping the mortgage interest deduction, implementing the 1031 exchanges, and limiting property tax increases are all issues that make our lives as business owners and property owners better.

But these issues would have never been passed or upheld if it wasn’t for the continuous support of RPAC. Our association—and every local association—should work to enlist 100 percent of its members to voluntarily support the contribution of RPAC.

3. Engaging the public. The times, they are a’changing.

The economy is changing. Work is being done differently compared to 20, 10, and even five years ago. The real estate industry has seen threats and challenges from discount brokerages to digital lockboxes to online portals. However, I believe wholeheartedly that none of these threats are as dangerous (or as imminent) as the threat of not having an agent involved in the real estate transaction.

Technology makes a lot of our job functions easier. It can even eliminate some job duties all together. But with better automation comes the real threat of eliminating the entire profession of the real estate agent. There are technology firms and real estate related companies out there today looking to do just that. They aim to make the real estate transaction as casual as buying a blender on eBay.

The association, on a local, state and national level, needs to insert its considerable might into the public sphere to showcase that buying and selling a home is not something that can be done with just a click of the mouse. The real estate transaction has many moving parts with several different players all working with different pieces of information. It can take weeks or even months for one transaction to close legally and correctly. Plus, an individual buyer or seller might conduct a single transaction once every five to 10 years.

It is the function of the real estate agent to coordinate the countless pieces of information and the multitude of personalities in order to achieve one attainable goal: to sell a home. A piece of software cannot do all of that on its own. If the association doesn’t engage the public on the usefulness of the real estate agent in every transaction, the duties of every REALTOR® will be reduced to that of a mouse click.

The future of the real estate agent, and, in turn, the future of a real estate board, is not as clear as it once was. Without a vision for future action, local boards may be caught reacting to the future instead of proactively shaping it.

Nico Hohman is the broker-owner of Hohman Homes, a residential real estate brokerage based in Tampa, Fla. Learn more about Nico at hohmanhomes.com or connect on Twitter: @thenicohohman.

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Stop Wasting Time With the Wrong Leads

Wed, 08/09/2017 - 16:22

Lee Davenport

By Lee Davenport

One hundred and seventy-five houses.

He showed 175 houses to only find out that the would-be buyer was not in a position to purchase for another year. My, my, my!

I hope you have never shown that many houses to a looky-loo—someone who is not prepared to buy for one to five years out, or longer. But even if you show five homes to a looky-loo, it’s still too many. Why? Because every prospective client has a time frame and we must respect and control our businesses to operate within the bounds of those time frames. If not, we will become frustrated and even burned out by giving those who are not ready too much time. Meanwhile, buyers who are chomping at the bit because they have to act fast are driven to another agent because you’re just not available. What a quandary, indeed.

Begin to classify and prioritize your time with leads using my “Lead Locator”:

I would love to hear from you. Give me a shout on Facebook, Instagram, YouTube, and Google+, or by visiting LearnWithLee.Realtor. Want more of the best practices from our nation’s top producers? Grab your copy of the short read, Profit with Your Personality. And, be sure to tell the real estate agents you know to get a copy of the 5-star rated workbook, Plan to Win!, to transform their real estate sales game plan. Here’s to your success.

Dr. Lee Davenport is an Atlanta-based real estate coach who trains agents, teams, brokerages, and other business organizations on how to use today’s technology to work smarter. Join Lee’s free RE Tech Insider’s Club by visiting www.LearnWithLee.REALTOR.

6 Outsourcing Tips For Effective Hiring

Mon, 07/31/2017 - 09:00

Anita Clark

By Anita Clark

Outsourcing in business is one of the most creative means of achieving your aims at a lower expense. In business or in any venture, great outsourcing tips helps in saving money and lessening the frustration of not having the necessary infrastructure to meet your needs. That is certainly true for professionals in all aspects of the real estate industry.

It is interesting to know that most businesses embrace the art of outsourcing, be it personnel, materials for production, infrastructure, or even skill—anything can be outsourced. All you need to know is the best way to find the right resource to meet your needs. Outsourcing can be a nightmare if the resource you find is illegitimate, which could lead to eventual hurt and disgrace for a business. Here are six steps that should be followed before and during the process of outsourcing to ensure success.

1. Clearly Define What You Want

Most of the people who outsource tend to forget that they are the ones best who understand what they want done. Assumptions about what you need are easily understandable, but can lead to a wrong step and may end up causing more trouble for you and the resource that you hire. Whether you are looking to hire someone to produce a full range of articles on home energy tips, help with marketing, or cover business tasks, you need to clearly spell out what you are looking for or you run the risk of wasting both your time and money. Being clear about the expected results prevents unnecessary confusion. As the client, you should also define the schedule with which the resource you hire should deliver whatever has been agreed upon.

2. Evaluate What Is Offered

This is a key step that most employers forget to focus on while hiring out services. Of all the outsourcing tips provided in this article, this is the most fundamental tip to have in mind. The best way of ensuring that you hire the right kind of help is by evaluating the qualifications of the resource. You should then focus on the feedback that other clients have given for this service provider. Approach the process as you would if you were hiring a full time employee, and therefore, take the time to do your research on the person you intend to hire.

@geralt, 2017. pixabay.com

3. Match Needs With Skills

This is one of the best outsourcing tips that will save you time in screening the applicants who wish to provide the services that you need. When a client states the specific skill set they intend to bring on board, random applicants who do not have that skill set will typically back off, leaving you with only a few applicants to evaluate. This will exponentially decrease the time it takes to weed through the applicants to find the right outsource hire. Remember, first impressions matter, so if someone does not match your needs, move on to the next person. Whether you are looking for someone to handle social media tasks, provide ghostwriting services, or something entirely different, you want to be both specific and realistic with your requests.

4. The Price Is Important, But…

One of the outsourcing considerations that naturally lingers in our minds is that costs need to be managed and not allowed to spiral out of control. However, it is wrong to consider the cost of outsourcing over the quality of output that will be shown at the end of the project. It is better for you to hire a resource who provides quality output at a high price, than a resource whose price is low but the outcome is compromised and of very low quality.

5. Plan Your Budget Wisely

Many people don’t allocate enough budgetary allowances for the provision of the services they need. It is frustrating to a service provider when they realize that you aren’t a good planner for the acquisition of a service you asked for. At the same time, your project may run aground when finances are inadequate. Service providers will end up distrusting you and you will fail to achieve the goal. Always make sure you have the funds to cover all aspects of the project, even setting aside 10 percent more for any unforeseen issues or opportunities.

6. Communicate For Success

Of all the outsourcing tips listed, this is the second most important asset you as a client can input while running a project with a service provider. The failure to communicate adequately can cause a lot of harm when a project is running. A service provider may be in need of clarification at some point and the best relief from a client to a service provider is communication. Communication fosters a good relationship in business and also counts a lot to ensure that milestones for a project are achieved within the given time frame. Do your part for making the project and ongoing relationship a success by effectively communicating through the process.

If observed, these outsourcing tips will help considerably to ensure results meet the standards that have been set by you, the client. When it works well, you can bet all parties will be happy and the current and future outcomes will be headed for continued success.

Anita Clark is a residential real estate agent with Coldwell Banker SSK, REALTORS®, in Houston County, Ga. She is from Coventry, England, is a retired military spouse, and has been assisting buyers, investors, and sellers in middle Georgia since 2007. Connect with Anita on Facebook, Google+, LinkedIn, Twitter, Pinterest, YouTube, or on her Warner Robins GA Real Estate Blog.

3 Tips to Get Leads From Your Website

Wed, 07/26/2017 - 19:02

Alexis Craig

By Alexis Craig

We all want them. We all dream about them. I’m talking about leads coming from our own websites. It’s the Holy Grail of real estate marketing—coveted by many but acquired by few. Internet leads can be more profitable and easier to convert.

Instead of running around every day chasing prospects, being rejected, or being hung up on while making a cold-call, we can turn the wheels and have prospects requesting to work with us. Unfortunately, for most of us, our website is nothing more than a digital brochure. It’s there to impress our clients and prospects but produces minimal results. For most, it’s just costing us a ton of money. We all know we should be on the internet. So, here are 3 tips that will help you generate more leads from your website.

1. Give them a good reason to become a lead. I heard this saying once: “You can put lipstick on a pig, but it’s still a pig.” Wherever it came from, the saying has shaped the way that I approach my business and marketing. I have always taken the saying to mean that strategy is more important than tactics. For example, when it comes to generating internet leads, it’s far more important to have the right offer than it is to mess around with things like button colors. All of that tactical internet marketing advice is useless without a good offer. You can’t improve your conversion rates with “hacks” if your offer stinks. Get your offer right and the tactical stuff is just icing on the cake.

@janeb13, 2016. pixabay.com

So, what makes a good offer? Get creative and think about your market. Here are some ideas:

  • A Bonus Video: This could be a video that dives into more details of an article you wrote or maybe an online virtual tour. It could be anything. Video tends to be perceived as a highly value offer.
  • Tools and Cheat Sheets: I love these and so do prospects. These tend to be easy to create because you can often take it from your own internal documents. For example, I have a cheat sheet that helps people write better Zillow descriptions. This guide was created from our own internal documents and standard checklist for writing listing descriptions.
  • Comprehensive Guides: Avoid the “ultimate guide to selling your home.” It’s hard to compete on that offer—a lot of agents already offer that and so does Zillow. Instead, get ultra-specific. Think, “Ultimate Guide to Buying New Construction” in a specific location.
  • Home Lists and Subscriptions: These are standard and they never get old.

Word of warning: I see a lot of agents creating a CMA offer. This is a great offer and should be on your website, but don’t let it be the only offer.  CMA offers tend to have low opt-in offers because (a.) every agent is offering it and (b.) Zillow has tools to let sellers determine their home price without ever having to talk to a real estate pro.

2. Dress your offer up with effective copy. There is a common assumption that writing great copy takes a lot of time. While there is some truth to it, it’s also inaccurate. The truth is that writing good copy on your website can be done in a few minutes with proven formulas. Once you learn the formula, there should be no reason I see the words “sign up to our weekly newsletter.” That’s not effective copy. When the internet was brand new and there were no other websites, this might have worked. But today, it’s going to get you a zero percent conversion rate. Here is a simple formula that I use to quickly write my opt-in copy: Have [single biggest problem your guide solves]? Get my [format of offer] and [get results] (twist — optional). Let’s look at some examples:

  • Having a hard time finding any homes in this seller’s market? Get my bonus video and discover how to find your dream home before any other buyers even know about them.
  • Have questions about what repairs to do before you list? Get my preparation checklist and know exactly what to repair and what you can leave alone.
  • Have to downsize? Get the list of single-family homes on the market and find your next home.

3. Place your offer in the right spots The more opportunities you give your market to take advantage of your offer, the better your conversion rate is going to be. Some spots you should place your offer:

  • On the sidebars of your pages and blogs.
  • As a dedicated landing page that is frequently linked to in articles or where you send traffic.
  • After, in the middle, or near the top of your blog posts — whatever makes the most sense for a given article.
  • A pop-up. It’s been said this is likely to negatively affect SEO in the future. So, use it if it makes sense for you.

In your offers, you could ask for an email, name, and phone number. If you ask for a phone number, your conversions will be lower but the leads will be more qualified. For that reason, I tend to only ask for phone numbers on “bottom of the funnel offers,” like the “Ultimate Guide to Buying a New Construction Home.”

Conclusion. In order for any of this work, you need to drive traffic to your website. There are a ton of ways you can do this. Use a mix of social media, offline marketing, and Facebook ads to drive traffic. Once there, you should start seeing some leads that can be followed up with until an appointment can be made.

Alexis Craig, founder of Mocha Homes, leads a team of real estate rebels in Lansing, Mich. Connect with her at mochahomes.com or facebook.com/MochaHomes.

Tech Companies You Need to Know

Wed, 07/19/2017 - 17:12

Meet the real estate tech companies providing promising tools to brokers, agents, and their clients. NAR and Second Century Ventures recently announced the new REach® Class of 2017, featuring a roster of startups focused on security, process digitization, information transfer, and more.

Learn about this year’s class:

Adwerx: A digital advertising company for real estate professionals that focuses on retargeting and localizing ads to help build brand awareness and attract clients.

Centriq: This platform is for homeowners to centralize all aspects of home maintenance, including making repairs and finding a local contractor.

HouseCanary: This residential valuations and analytics tool provides data for every block and property in the U.S.

immoviewer: A DIY real estate software for creating and sharing 3D home tours.

Notarize: A digital notarization platform that allows businesses and individuals to collect and notarize documents anywhere, anytime, online.

Occly: A wearable personal safety device with four built-in cameras and audio capture, and an alarm button with 24-hour live monitoring.

Pearl: A certification system that uses technical data on a home’s energy efficiency to create a certification package that agents can use to market a property.

Relola: This app allows real estate pros to capture and share their insights on local listings they’ve viewed. The insights automatically post to the agent’s website and across their social channels.

Trusted Mail: Protect email from phishing attacks and cyber threats with this facial-biometric sign-in.

For more information, visit narreach.com.

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Building Wealth Through Homeownership

Tue, 07/11/2017 - 17:49

John Blom

By John Blom

I’m often asked why I spend as much time as I do volunteering with the state (Washington REALTORS®) and National Association REALTORS®. There are many reasons, but perhaps the greatest is that I truly believe in the importance of  homeownership advocacy at every level. I believe in the value of owning a home, and that this opportunity should be protected and expanded.

Just before this year’s REALTORS® Legislative Meetings & Trade Expo in D.C., I read an article in the New York Times attacking the mortgage interest deduction with the attention grabbing headline: “How Homeownership Became the Engine of American Inequality.” Discussion of inequality has increased in recent years, and rightly so. However, to claim that homeownership is driving inequality in America could not be further from the truth.

The article cites statistics concerning how much savings wealthy individuals get from the mortgage interest deduction (MID) compared with middle class homeowners. Many moderate income earners may not even itemize their deductions, so they get no benefit from the MID. Factually, that is accurate, but it ignores the fact that people who make more than $100,000 still pay 75 percent of all the income taxes collected, according to Pew research.

There are other issues with arguments in the article and my point here is not to respond to each of them.  The greatest flaw, and this I will address, is the sweeping statement within the headline.  I would argue that promoting homeownership is one of the single greatest ways to address inequality, and government at every level should be more proactive in adapting policies that promote homeownership.

Housing expenses have increased dramatically in the last five years, both for renters and for new buyers. But for homeowners, the mortgage payment remains relatively constant, only changing in response to the cost of insurance and property taxes. As a result, individuals and families that are able to better to plan for their financial future, without concerns of “what is my rent payment going to be next year.”

@Skitterphoto, 2015. pixabay.com

A mortgage payment is also a forced savings plan. A portion of every payment goes toward equity. It might only be a small amount in the early years of the loan, but it is adding up over time. Over the first five years of a 30-year mortgage, a homeowner who began with a $200,000 loan would accumulate over $17,000 in equity. They get an additional $23,000 over the next five years. Those numbers do not even include the steady, long term growth of housing values that add further equity.

Picture the impact that can have on a person’s life. I had a client who was single mom of two boys. She had a decent job and could pay the bills, but it was clear there was not a lot of extra money. I helped her get into a small, three-bedroom home in a good school district where her payment was just a little bit more than what she was paying in rent.

Over the past four years her boys have received a good education. That education has never been disrupted because rents went up, causing them to move and change schools. As her pay has increased, the portion of her overall income that goes toward housing has declined. And, she has built up net worth without expending any more money than she was previously.

If more people could have this experience as opposed to sitting in a rental for five years with nothing to show for it but higher housing expenses, we will be moving in the right direction when it comes to equality.

What we do as REALTOR® volunteers makes a difference. Each new person who is able to buy a house because of the work we do fighting for the mortgage interest deduction, defending the 30-year mortgage as we know it, or supporting first-time home buyer savings programs is not just another transaction for an agent somewhere, but a life that will be changed because of the opportunity.

That’s what makes the time away from my home, my family, and my business worth it.

John Blom is a broker for the Hasson Company REALTORS® working in the Portland/SW Washington market. He is the immediate past-president for the Clark County Association of REALTORS®. You can find him on Twitter: @johndblom, LinkedIn, on his website johnblomhomes.com, or e-mail him at johnblom@hasson.com.

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4 Ways to Find Off-Market Deals for Buyers

Wed, 07/05/2017 - 13:23

James Vasquez

By James Vasquez

If you’re like most real estate agents, you probably source deals for your clients who are looking for fixer uppers or rental property using only one tool, your local multiple listing service (MLS); ours is San Antonio Board of REALTORS® MLS. When I first got started in real estate seven years ago, I fell into the same mindset that most practitioners are stuck in today: That I should only use the MLS to find deals for my investment company, House Buyer San Antonio, and my investor clients.

And for a few years it was working for me, then the market shifted, and competition for “listed” properties became so fierce in my local market of San Antonio, Texas, that I was forced to make my own shift from the MLS to sourcing “off-market” deals through marketing and networking. Finally, with the laws of supply and demand working for me instead of against me, I was able to get a handle on my business and consistently find equity-rich deals for my own company and my investor clients. Here are just a few of the many ways that I have had success in finding off-market, equity-rich properties.

Send Direct Mail To Find Motivated Home Owners

Why on earth would any real estate professional want to spend the time and money that’s required to send out direct mail to find deals for their clients? Because when you market directly to home owners to find deals for your clients instead of searching a source that’s saturated (the MLS), you’ve essentially cut your competition out of the equation and simultaneously removed the commission limitations set by listing agents.

I’ve spent well over $150,000 in direct mail (letters and postcards) over the last seven years, and I can attest that there are, at any given time, only a small handful of investors who are actively sending mail to find deals. But here’s the kicker, only a very small subset of those investors are even willing to pay up to what your buyer might be willing to pay for a property, especially if your buyer is looking to build their rental portfolio, and not flip.

If you can get home owners calling you from either a post card or a letter, and you are able to make “reasonable” offers on your client’s behalf, you might be pleasantly surprised to find that sourcing deals for your client’s using direct mail is easier than you thought. Here are a few other benefits of buying directly from the home owner, on your client’s behalf:

  • You typically won’t be in multiple offer situations, even on great deals.
  • You get to decide what your commission should be, not a listing agent.
  • You get to structure the deal the way you and your cash buyer want it.
  • You can easily scale your marketing up or down depending on needed inventory.

Work Through Local Wholesalers To Source Equity-Rich Deals

Ever seen those annoying “we buy houses” signs strewn throughout your city around major intersections? Well, those are usually your local cash home buyers/wholesalers. Wholesalers typically don’t actually close on deals, they just negotiated a deal, put it under contract, and then sell that contract to another investor for a fee. Although we’re not one of those companies that claim to buy houses using handwritten signs, we do buy houses directly from home owners. Once we have the deal under contract, we start looking for a buyer that can close on the deal, that’s where you and your buyer come in.

What if you had just a couple of trustworthy wholesalers like us to go to where you could get “off-market” deals with tons of equity for your clients without all the competition that’s inherent with the MLS? What would that mean for your client that wants to build his or her rental portfolio and is looking to you to help find and purchase five houses in the next two months?

Should you decided to network through your local wholesalers/investors to find deals for your clients, you don’t need to worry about not getting a commission, because you can easily add your fee onto any sales price that you negotiate for your client; Of course, you and your client can determine the amount in your representation agreement.

@paulbr75, 2016. pixabay.com

Make Offers Directly To Expired Listings On Your Client’s Behalf

For some agents, working expired listings is the lifeblood of their business. Most agents have found that sending direct mail to expired listings or even door knocking works and can be lucrative, but it’s a lot of hard work.

What I’ve found is that many investors don’t go after expireds, for two reasons: One, they think that if the listing expired, the seller isn’t flexible; and two, that niche is over saturated with agents. Both schools of thought probably have some validity, but there are exceptions to both.

A seller that wasn’t motivated while their house was overpriced on the MLS, just might be tired of dealing with it when you call to make a cash offer for it for your client. They might be ready to trade equity for peace of mind.

Also, the expireds niche is saturated with agents, but those agents aren’t making offers, they’re trying to secure a listing. You can separate yourself from the crowd by “bringing them a buyer,” instead of trying to convince the seller that you can “find them a buyer.”

If this strategy interests you, you can use The Red X to help you locate expireds’ contact information.

Find Vacant Houses & Track Down Owners

We’ve all been driving our farm area and noticed that house with grossly overgrown grass and newspapers in the driveway. Don’t keep driving; that’s potentially the next deal for your client. Take down addresses of the abandoned looking houses that you pass by all day anyway. Then, when you get back to the office, grab the current owner’s contact information from your local county tax assessor’s office and look the owner up on the white pages or a paid service like Intelius.

Instead of going for the listing, present your client’s cash offer. Most of these types of leads won’t sell to your buyer right away, but the gold is in the follow up. Just add them to your CRM, we use Podio because it’s highly customizable, but no matter what CRM you use, follow up at least two times a month until the home owner either sells the house or asks you to stop calling.

In my seven years of experience in this area, I know that the “vacant house” home owner will eventually sell to an investor; why not your buyer?

To Sum it Up

Those that think creatively and separate themselves from crowded niches, especially in the real estate industry, will be richly rewarded. Think of the profit potential that you might achieve by sourcing, negotiating, contracting, and selling your own deals for your real estate investors.

James Vasquez is the broker-owner of Done Deal Buyers in San Antonio, Texas, a real estate company that buys houses directly from home owners. Learn more at DoneDealBuyers.com

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Educating Clients on HUD

Thu, 06/22/2017 - 17:38

Ryan Fitzgerald

By Ryan Fitzgerald

Given the large financial requirement of buying a home, it’s often out of reach for a large portion of the U.S. population. The economic recession, which was triggered by the collapse of real estate and mortgage lending markets, further decreased home buying accessibility. A number of lenders have returned to the 20 percent down requirement when purchasing a home. Since the median price of a U.S. home is currently $228,400, most Americans do not have access to the $45,680 which would be a 20 percent down payment. Certainly, the better credit score a consumer has tends to decrease the required down payment percentage.

Fast growing economies in cities like Austin, Texas and Raleigh, N.C., didn’t see as many home foreclosures as compared to cities like Las Vegas and Atlanta during the recession. When you have higher volatility in home prices, combined with a slower economic growth pattern, the result becomes more HUD foreclosures. So, what is a HUD home, and how do you explain this to your clients?

A Short History on HUD

@Unsplash, 2015. pixabay.com

The U.S. Department of Housing and Urban Development was established in 1965 via the HUD Act, signed by President Lyndon B. Johnson. The primary goal of the HUD program was—and still is—to expand the availability of funds for housing programs and to reach larger segments of the U.S. population. Per HUD’s website, the department’s mission is to “create strong, sustainable, inclusive communities and quality affordable homes for all.”

In terms of home buying, HUD homes are houses that have been purchased through the Federal Housing Administration’s (FHA) government insured loans. HUD assumes ownership of homes should a home buyer default on their loan and, subsequently, their home is foreclosed.

How to Help Clients Buy a HUD-owned Home

Buying a HUD-owned home is a bureaucratic process that requires specific steps—though HUD states that it’s often easier than performing a traditional real estate purchase transaction:

  1. First, you must be a HUD registered real estate agent to help your clients place a bid. However, you or your clients can also research the HUD home inventory independently at the HUD portal.
  2. You’ll then need to contact the Listing Broker indicated on the HUD home listing.
  3. Your client’s offer must be made during what’s known as a specific “listing period.”
  4. HUD emphasizes the importance of obtaining a home inspection—however, even if your clients aren’t buying a HUD home, home inspections are still recommended.
  5. If your clients are financing the purchase of a HUD home, they will need to obtain a mortgage loan through a traditional lender. If they’re  seeking an FHA loan, they must secure the loan through an FHA approved lender.
  6. Owner-occupant purchasers are priority bidders and HUD gives them a certain amount of time (10 days) in which to bid on the purchase of the home.
  7. HUD homes are maintained and inspected by a Field Service Manager (FSM), which is a third-party company or individual who contracts with HUD to perform any repairs or general maintenance as required. If your clients have specific questions about the home, you’ll be directed to contact the FSM.
  8. Asset Managers are also third party contractors who are responsible for marketing and selling the home. Therefore, questions about the selling process can be directed towards the company or individual who is the AM for the property of interest.
  9. If you’re not a registered HUD agent, your clients can still use you as a closing agent, however, they will be responsible for paying any fees involved in conducting the closing.
  10. The down payment, closing costs, and commissions are generally lower when buyers purchase a HUD home.

Buying a HUD home can take a fair amount of navigating through all of the bureaucracy. However, considering that HUD doesn’t necessarily want to maintain a large inventory of empty homes that are just sitting on the market, your clients may find a great deal on a brand new home. Another great website to check out for HUD homes is HomePath.com by Fannie Mae.

Ryan Fitzgerald is the owner of Raleigh Realty in Raleigh, N.C. Connect with him on Facebook, Google +, LinkedIn, Twitter, or Pinterest.

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