*preference, sorry for the misspelling*
I'm trying to figure out how the system works...or should work.3 doors down from my home is a property that was just listed as a HUD. The remarks said it was only open to government and non-profit bids for the first 5 days. It should have opened up yesterday to all, but was taken off the market. We had planned to do an owner occupant 203k loan for my partner to live in.
I called the listing agent and was told the property was under contract. He said a non-profit had contracted to buy. When pushed for more info he said it was common for many HUDs to not even hit the market listings. They typically just sent HUD lists to the non-profits directly instead of the MLS and they typically bought them at a 50% discount off listing price. He said this home being listed was unusual. He was told to list this last property but under the 5 day gov't/non-profit only rule. In researching what I can, I'm under the impression that owner occupants were supposed to have first dibs. We had an offer planned and pre-approval in hand for 203k.
Have you heard of this practice of not listing HUDs and/or only allowing non-profits to bid first? Am I off on my thinking? If I'm not, is there recourse? This isn't the only property in the world, but it seems that my partner and I are at a severe disadvantage if everything is being fed to a select group of community developers first. I get the rule putting investors off for a bit, but we would be own occupants. Any insights?
It is rare to see that designation but yes it does happen. During the 5 day period only Government/non-profits are permitted to bid on the property. Usually these properties are in targeted revitalization areas.
No there is no recourse as neither owner occupants or investors can place a bid during this time
I don't know the ins/outs, but sure someone here does. Maybe there is a chance you can create a non-profit to buy the house. Then your bud rents the house from the non-profit. Some of the investement gurus used to teach this I think. I've seen some owners with names like Dallas Family Housing, Dallas Community Outreach. Might give you a leg up.
HUD makes these houses available for municipal housing authorities and non-profits that provide low-income/affordable housing. And since HUD is in the business of promoting affordable housing, it seems consistent with their mission.
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There is nothing underhanded going on her. The policy of offering a small percentage of homes to government/non profit first has been around for at least 25 years.
Your local HUD office has zero to do with the process of selling HUD homes and they have zero knowledge of the process
Additionally, it is not as easy as just setting up a nonprofit. You have to meet hud guidelines and restrictions come with the purchase
I appreciate that Greg. I understand and have read through many of the program offerings to non-profits. I can see how these programs for non-profits can be beneficial to communities needing substantial rehabbing. SLC is not one of those markets.
Properties should be made available to the public first. After all, we are subsidizing any losses on these homes. It is also in their guidelines.
From what I've researched so far, it isn't a small percentage being offered to non-profits, it is the majority. In fact, the listing agent said he almost never lists HUD homes on the MLS, they just email out lists the non-profits to bid on.
I understand non-owner occupant investors being held at bay or bidding, but an owner occupant tax payer shouldn't have to wait for these homes to be rehabbed before having a chance to purchase.
Let's face it, these non-profits are turning a profit, they are selling their properties at market value but paying cents on the dollar. They could pay their ceo 30k in bonuses for each property sold and still claim non-profit status. They should be placed in line behind owner occupants in bidding.
Regardless of how directly involved a local hud office is, they should be willing to offer whatever information they can. The local employee told me that I had no business knowing who he reports to and hung up on me.
I also get that it is more than just setting up a 501(c)3 to be able to bid. I've read the process. I'm not in a place to do that yet, but it may be an option when I have more resources and time to put it together. That, unfortunately, may be the only way to level the playing field.
Utah has 1 property currently listed under the lottery designation. Texas has 1 of 155 properties listed under the lottery designation. It has always been less than 3% of the listing inventory.
As someone who has made a living for 25 years buying HUD properties and charting the system, worrying about such a small percentage just isn't worth it.
In my opinion, it's much more beneficial to figure out how to win within the system then complain about it because the system isn't changing
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