For lots of reasons, foreclosure properties have gotten a bum rap with owner-occupant buyers and their agents. Much of the problem stems from the non-traditional sales process. Some of the issue is related to property condition. It’s also fair to state that buyers agents have contributed to the problem by refusing to work in the parameters of the industry while cursing the process and the properties to their clients.
The times are changing and rather significantly. Agents who trash working with a bank owned property may be doing their owner-occupant client a disservice. Granted, the robo-signing fiasco added more fuel to the fire of these agents and buyers while setting back the confidence of potential purchasers. I think all of that aside, 2011 is going to be the best year ever for owner-occupant buyers who chose to buy a foreclosure.
Here are some of the reasons why
The three major servicers of foreclosed properties are HUD, Fannie Mae and Freddie Mac. All three are government owned and all three have placed sales to owner-occupants front and center. HUD provides a 30 day bidding preference for owner-occupants under their new program for foreclosure sales. Additionally, there is much needed transparency available to agents and buyers at the new site HUDHomeStore.com to assess a property’s condition before deciding to physically inspect it. Fannie Mae’s HomePath program offers the best financing in the industry through participating lenders. This very aggressive program offers 3% down payments, no mortgage insurance, no appraisal requirement, and frequent incentives for buyers and agents. Freddie Mac through its HomeSteps program is offering a SmartBuy Purchase Program that offers 2-year home warranty protection and other incentives for owner-occupant purchasers.
You have to have a history working with foreclosed homes to realize how far the industry has come in regard to what shape these homes are shown in. It was only a few years ago when we had clients that actually tried to sell homes without a trash out having occurred. Overgrown lawns, broken windows, the list of community eyesores was lengthy. There is no doubt that the entire industry seemed focused on keeping losses at a minimum with total disregard to how properties would likely only appeal to the investor buyer. In hindsight we can now see how all of that spun out of control and actually caused more foreclosures. Today, homes are cleaned out and secure. Regular property inspections by the brokers and field service companies are mandated. There is also a healthy discussion within the industry as to how much rehabilitation and staging should be invested by the servicer/owner to make the home more appealing.
This process scared many agents away. It was very time consuming and little status information could be obtained. Selling agents would look to the listing agents and we had no news and no way to really provide a timeline when a response might occur. A couple of things are happening to change this and make it more friendly to the selling agents. First, more and more the selling agents are going to be able to enter their offers on-line and have them directly submitted to the lender. The HUD system is what I would consider the template for others. An agent registers at HUDHomeStore.com, enters an offer while affirming an actual Purchase Offer signed by the buyer exists. Then an email is sent if their offer is accepted or they can log into their account and see that an offer was rejected. Fannie Mae is also testing an on-line offer system in select markets. I project in 2011 these systems will become much more common as they eliminate one of the ongoing concerns expressed by agents, “did my offer really get presented?”
So, as you consider purchasing a home, or representing an owner-occupant buyer, consider giving the foreclosed property market a new try. It’s evolving and the changes, while brought on due to necessity, will allow us to leave the questions caused by the fall’s robo-signing fiasco in the long ago forgotten memory.