Welcome to HUD Selling Broker Training! June 19, Memphis Area Association of REALTORS

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1 Welcome to HUD Selling Broker Training! June 19, 2017 Memphis Area Association of REALTORS

2 Greg Glosson, Fast Track Realty Licensed in 1996 Broker in /- HUD owned sales since 1996 Licensed Broker in TN, MS, AL, AR, MO, KY & FL Mobile:

3 Highlights of HUD s M&M 3.7 Changes Where HUD Properties come from & where to find them. Broker Registration Process Bidding Process Preparing & Submitting the Contract The Closing Process What we will cover today...

4 April is Fair Housing Month Every Day is Fair Housing Day

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6 Article 10 of the Code of Ethics The Code of Ethics:Article 10 of the National Association of REALTORS Code of Ethics provides that, "REALTORS shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity."

7 HUD s Mission and Fair Housing To increase homeownership, support community development, and increase access to affordable housing free from discrimination including: Race, color, religion, national origin, sex, handicap, familial status.

8 HUD Home Myth Busters Myth: HUD Homes are low-end housing. Fact: HUD homes are available in a variety neighborhoods, condition and prices ranges. Myth: HUD Homes are not good investments. Fact: HUD homes are offered at fair market value Myth: HUD will pay for you to totally remodel and update your HUD Home. Fact: HUD Homes are Sold AS-IS

9 Where HUD Properties Come From A HUD-owned property... FHA insured loan, Foreclosed by the lender, and Lender transfers ownership to HUD in return for payment of the insurance claim.

10 Benefits for You when Selling HUD Homes Any licensed real estate agent can show any available HUD property. You can advertise HUD homes. Unlike Short Sales, no waiting for approval You have reports and basic information about the home You know that HUD will not perform any repairs Continuing inventory of homes

11 Showing HUD Homes Any licensed real estate agent can show any available HUD property. Sign In when showing property Insure property is locked & secure when done! Removing or damaging any signage is forbidden! Unprofessional practices and non-compliance could result in your brokerage being suspended from selling HUD homes!

12 Can You Advertise HUD Homes? YES! (get approval from listing Broker) DO use equal housing logo Advertised prices must match hudhomestore.com Be positive and promote HUD homes Acceptable References include HUD-Owned, HUD Acquired or For Sale Do not imply exclusivity. Do not place a sign on the property or yard.

13 1:Broker must have NAID 2: Broker must register on website 3: Create your Selling Agent account

14 Broker must submit paperwork to HUD to receive a Name Address IDentifier). Up to 45 days ( 6-8 weeks) to process. Must renew annually, NO NOTICE IS SENT. If your number expires, it takes 45 days to process as well. HUD Resource

15 Broker of Record must Register as a Bidder

16 re.com Click register as a BIDDER. Once registered, you will be able to log in and view properties, submit bids, save searches, etc. If you try to register and the site returns a page with a red error message, your broker is either: Not registered, or You didn t update the site with your current license expiration date.

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18 ANY QUESTIONS.

19 What should your Buyer know before making an offer on a HUD owned home? Talk about expenses the buyer will have prior to closing. Utility Activation and LBP

20 Utility Activation Selling Brokers & buyers are responsible for any Utility Activation/Home Inspection/Rewinterization. To request activation of utilities for the home inspection/appraisal from the HUD Field Service Manager, P K MANAGEMENT GROUP INC, please complete the request form on their website: Please allow P K MANAGEMENT GROUP INC 2-3 days to process your request. For questions regarding utility activation, please contact the FSM at

21 Lead Based Paint (LBP) Stabilization HUD will complete a LBP assessment only if all three stipulations exist: --home was built before owner occupant --FHA financing

22 If LBP test is Positive Using 203k financing: HUD will credit up to $4000 If 203b (FHA) financing: 1. HUD will perform stabilization up to $4, If >$4,000, buyer has 3 options: a. Switch to 203k and accept credit as noted above b. Switch to conventional financing or cash c. Cancel and receive refund of Earnest Money deposit (EMD)

23 Home Inspections HUD highly recommends that your buyer have a home inspection completed. You have 15 days after receiving the seller signed contract to complete a home inspection Send request form to asset manager Asset Manager will generate a work order to the Field Service Manager (FSM). FSM will contact the selling agent to have buyer turn on utilities, timeframes, re-winterization fees, etc. Remember!! No repairs until after closing! Selling agents must accompany buyers, inspectors, appraisers, etc, to HUD properties prior to closing.

24 Termite Letters HUD will provide a termite letter only if: - Owner Occupant - FHA financing Send request in to the asset manager The asset company will order the inspection; HUD will fund up to $1000 in treatment and repairs If not FHA, the buyer can have an inspection performed in the 15 day inspection period at their own cost.

25 Who are HUD Buyers? Government Agencies & HUD approved non-profits Investors Owner Occupants Good Neighbor Next Door Owner Occupants

26 HUD Buyer Types Owner Occupants Have priority during certain bid cycles Required to occupy as primary residence for 1 year Cannot purchase another HUD property as an owner occupant for 2 years Investors May submit bids on Day 16 (Extended period) No restriction on purchase quantity

27 HUD Buyer Types (Continued) Government Agencies & HUD Approved Non-Profits Must be approved by HUD as a Non-Profit. Have their own NAID; submit bids themselves. Good Neighbor Next Door (GNND) The Good Neighbor Next door program offers firefighters, EMTs, police officers and teachers significant discounts for purchasing homes in designated revitalization areas.

28 GNND Program HUD offers 50% discount off of the list price to eligible buyers. Buyer cannot own another home for one year after closing. Buyer must occupy home as primary residence for a period of 3 years. Eligible participants must work in the same area as the location of the home. Properties must be located in HUD designated revitalization areas.

29 GNND (Continued) Buyer must bid 100% of the list price. Can utilize any type of financing or cash deal. When using FHA Buyer must qualify for entire contract amount prior to discount Can finance into mortgage all reasonable and customary closing costs HUD will not pay any closing cost or real estate commissions.

30 Q: So, when can my Buyer submit an offer? A: It depends on two factors: condition Location

31 The Condition of the property will determine the Listing Code Listing Codes IN - Insurable IE - Insurable with Escrow UI - Uninsured

32 Listing Codes IN - Insurable Appraisal indicates the property meets 203b minimum property requirements (MPR), no obvious repairs necessary. Think traditional FHA loan IE Insurable with Escrow Appraisal indicates the property will be eligible for 203b FHA loan but needs some repairs; necessary repairs total less than $10,000. Think traditional FHA loan UI - Uninsurable Appraisal indicates property does not meet minimum property requirements (MPR) and/or requires more than $10,000 in MPR repairs. Think FHA 203k loan

33 IN Insurable Property condition qualifies for FHA 203b financing No repair escrow requirements Does NOT require using FHA loan for purchase

34 IE - Insurable with Escrow Only applies when using FHA 203b financing and required repairs are less than $10,000 Not a gift from HUD! NO REPAIRS CAN BE MADE BEFORE CLOSING. The buyer must come up with this amount in cash at closing ABOVE the purchase price! On the listing you will see an itemized list of required repairs, the amount plus 10%. At the closing table, the purchaser will give this amount to be held in an escrow account. The lender will order the repairs to be complete in 90 days by a licensed contractor. FHA will inspect and the contractor will be paid out of the escrow account. If all the money is not used, it will apply toward the loan principal.

35 UI - Uninsurable Property requires repairs, in excess of $10,000. Eligible for FHA 203k renovation financing. Does NOT require use of FHA financing.

36 The Listing Code (condition) determines the Listing Period Listing Code IN - Insurable IE - Insurable with Escrow UI - Uninsured Listing Period Exclusive Extended Lottery

37 IN Insurable IE Insurable with Escrow Exclusive Listing Period Extended Listing

38 EXCLUSIVE PERIOD: First 10 days Bids submitted during the first 10 days are held and not responded to. On the 11 th day all bids opened and reviewed. (Sealed Bid Period) (Governments, HUD approved non-profits, Owner Occupants) EXCLUSIVE PERIOD: Days 11 to 15 Days are daily owner occupant bidding. Bids received are reviewed each day, may be accepted. (Daily Bid review) (Governments, HUD approved non-profits, Owner Occupants) EXTENDED PERIOD: Day 16 On day 16 all Bidders are allowed for daily bidding. This is where Investors can submit bids. (Daily Bid review) All Bidders

39 Is the house Uninsurable (UI)? Then, the home will be listed under the Lottery Period first

40 UnInsurable (UI) properties LOTTERY PERIOD: 7 days 5 Day Sealed Bid period; bids opened on the 6 th day. Days 6 and 7 daily bidding review. Government Agencies, HUD approved non-profits EXCLUSIVE PERIOD: 5 Day Sealed Bid period; bids opened on the 6 th day. Homeowners, Government Agencies, HUD approved nonprofits EXTENDED PERIOD: If no acceptable bid is received, the listing shall be extended to all buyers.

41 If the property is in a Revitalization Area, HUD may decide to list the home for sale under the Good Neighbor Next Door (GNND) program.

42 Good Neighbor Next Door properties LOTTERY PERIOD: First 7 days Good Neighbor Next Door qualified bidders. First 5 days are sealed bids, all bids reviewed on day 6. Day 6 & 7, daily bidding for GNND buyers. EXCLUSIVE PERIOD: Days 7 to 15 Owner Occupants, HUD approved non-profits, and Government agencies Bids reviewed Daily EXTENDED PERIOD: Day 16 All Bidders (includes Investors)) Bids reviewed Daily

43 Dollar Period For properties that could not be sold after 6 months on market. Offered to municipalities for $1. Foster opportunities for low and moderate income home ownership.

44 Remember. If the property is not available on hudhomestore.com, is in a pending status, or is under contract, YOU CANNOT BID!

45 FHA and the HUD Appraisal Using FHA financing? Lender will order an appraisal as part of their regular process. Buyer pays for the appraisal NOTE: The asset company may require a submission of proof of funds when bidding over asking price.

46 Submitting an Offer 1. Go to 2. Log in as Bidder 3. Find the property 4. Click on Submit an Offer

47 Submitting an Offer No TAR forms needed Earnest money in certified funds and prequalification should be received from your Buyer before you submit online: $500 if sales price $50,000 and under $1000 if sales price is $50,001 and over Half the list price if property is a vacant lot. LLC or Corporate purchasers must include Articles of Organization, Operating Agreement and Resolutions authorizing person signing to act on behalf of the organization.

48 Once your Bid is complete: Print the Bid Acknowledgement page.

49 Offer Acceptance On bid deadline day, all offers are reviewed and either accepted, rejected (cancelled), or counter offered. This is done by . The asset management company will notify you via if your bid is accepted. Please keep an eye on your spam or junk mail folder if you have put an offer in. If a change needs to be made after the contract is accepted, notify your asset manager immediately. Cancellation forms? On asset managers website.

50 Preliminary Bid Acknowledgement for MR Buyer and Mrs Buyer Number: 482-xxxxxProperty Address: 307 Nora Dr, Newbern, TN 38059Bid Confirmation: xxxxxxxxxPurchaser Type: I (Investor)Bid Amount: $ EMD Amount: $500.00Contract Due Date:Wednesday, March 22, 2017 Any REALTOR Real Estate Agent Congratulations! Your bid for the subject property has been provisionally accepted subject to receipt and approval of the required documents. Please notify us immediately if the purchaser will not be moving forward for any reason. Buyer Select Closing Agent ProgramPlease be advised that in the State of Tennessee, HUD has implemented the Buyer Select closing agent program. The purchaser is now required to select their own escrow company for the closing. The HUD Closing Instructions must be signed by the Buyer Selected Escrow Officer and submitted with the sales package (original signature not required). Please note, HUD will pay the buyer s settlement fee to the extent that closings costs were requested on Line 5 at the time of bid submission and there are sufficient funds remaining to pay the fee. Sales Contract Package and Earnest Money Deposit If you have not already completed a Q Integrated Companies Llc Sales Contract Package for this transaction we have attached one specifically for this offer. Please type in ALL the required fields on the first page of the attached PDF sales package form (INCLUDING: Buyer(s) SSN/EIN, Broker Address and Buyer Select Closing Agent information) and make sure it is complete and accurate before sending overnight to our office. Sales Contract Packages submitted with errors and/or omissions may result in immediate cancellation of the offer.the complete original sales package (including original purchaser(s) and broker signatures in blue ink), HUD Closing Instructions acknowledged (signed) by the buyer selected escrow officer, EMD Receipt Confirmation with a COPY of the Earnest Money Deposit and the purchaser's pre-approval letter or proof of cash funds must be received in our office by the contract due date above at the following address: ATTN: Contract Review3354 Perimeter Hill Drive, Ste 141Nashville, TN 37211

51 The Original Earnest Money Deposit in the amount of $ must be delivered to the Local Listing Broker (LLB) by Wednesday, March 22, 2017 at the following address: Fast Track Realty LlcBeth Glosson1045 S Yates RdMemphis, TN 38119(901) Additional Information All HUD properties are sold in their As-Is condition and HUD will not make or allow any repairs prior to closing. The financing type on the bid was Cash, Conventional or Other Financing. Please note that all cash sales have 30 days to close. If the purchaser is obtaining VA or USDA financing please contact the lender immediately to discuss the HUD's policy of NO repairs prior to closing before proceeding. Please let us or our Local Listing Broker know if you have any questions or if we may be of any assistance. Thank you, Q Integrated Companies Llc

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53 Frequently Made Errors Top 5 Common Contract Errors Correct Entry Line #3 Earnest Money Held By BSCA as of July 1, 2013 Be sure to enter correct amount of earnest money. Line #4 Type of Financing Check correct box that corresponds to the financing type. 203b is not accepted if the property is listed UI. Line #9 Closing Timeframe Line #11 Frequently left blank and it should not be. Line # 12 Purchasers initial Earnest Money Deposits 30 days for cash 45 days for financed 60 days for 203k Be sure to check correct box and attach all appropriate addenda. Other addenda always included in a contract package. Lead Based Paint addendum required if house built prior to All purchaser(s) initials must be on the contract.

54 NOTE: Accepted Contract package MUST be in their hands within 48 hours. The COMPLETE ORIGINAL contract package MUST be received by the Asset Manager within 48 hours of acceptance.

55 Buyer Select Closing Agent program TN now is part of HUD s Buyer Select program (BSCA), effective July 1, 2013 Chronos Solutions/ Q Integrated EM (payable to closing attorney) is delivered to the NLB/BLB. Buyers agent overnights contract to the Asset Manager.

56 Information needed for Buyers Attorney Buyer will select their attorney for closing... Selling agent fills out the BSCA form Attorney will coordinate with Title company for HUD, and prepare all necessary closing paperwork If Attorney has closed HUD transaction after 07/01/2013, enter their Buyer Select ID# on form If they have not closed a HUD deal recently, Selling agent needs to obtain from the attorney: Proof of law firms E&O insurance TN Law license Provide the above to NLB, along with BSCA form

57 Buyer Select Closing Agent Q Integrated appropriate earnest money deposit (in certified funds), payable to the Buyer s choice of closing agent, must be delivered to the LOCAL LISTING BROKER within 48 hours of bid acceptance. If these funds are not delivered timely, your buyer s bid is subject to immediate cancellation. Selling Agent is responsible for submitting the contract package to Q Integrated via overnight delivery (FedEx, UPS, etc). Visit for delivery address and more information. Alabama, Mississippi, and Tennessee are managed by our Nashville Office. Our Toll Free number is Please follow the prompts for the Nashville Office (HUD Area 6A).

58 Where Do I Overnight the Contract? Overnight Sales Package to: Q Integrated Companies 3354 Perimeter Hill Drive Suite 141 Nashville, TN

59 What Makes An Offer Sign-able A Completely Correct Contract with all of the required addenda! A correct social security number MUST be submitted with the original bid or the contract WILL be cancelled.

60 The HUD Sales Contract Package Electronic HUD 9548 Sales Contract/ Condition of Sale Electronic Filing of HUD 9548 contract addendum Owner Occupant Certification (if applicable) For Your Protection: Get a Home Inspection Radon Gas and Mold Notice Pre Qualification Letter Or Certification of Funds Forfeiture and Extension Policy or General Addendum Lead Based Paint Addendum (if applicable) Flood Zone addendum (if applicable) Notice to Purchaser addendum (if applicable) Earnest Money check with EM Certification Form All signatures in blue ink CONTRACT PACKAGE WILL BE ED TO YOU

61 Contract Extensions Extension fee of $ Granted in 15 day increments/ must be submitted in certified funds If all 15 days are not used, the unused amount will be prorated back to buyer and refunded in escrow.** The fee and request form must be submitted to the Asset Manager at least 5 days prior to contract expiration.

62 Forfeiture of Earnest Money Warn your buyers that they could lose their earnest money if they fail to close. Investors: lose 100% earnest money for failure to close Owner Occupants: Could lose 50% of earnest money for failure to obtain a loan Could lose 100% of earnest money if no documentation is sent in.

63 HUD recommends that you complete a walk thru the day prior to closing. The lockbox may be removed when you get to property. Please coordinate with the listing broker to retrieve the key. Contact the asset manager if there are any issues.

64 Lender Documents and the Closing Please let the lender know they need to have all the closing documents to the closing agent at least 5 days prior to close. Post Closing Buyers Re-key their new home immediately at their own expense.

65 Resources for Agents Main Nationwide website Other sites:

66 Information on FHA Issues/ Lenders/Programs/ Processes FHA Resource Center CALLFHA ( ) info@fhaoutreach.com FHA frequently asked questions website

67 Q Integrated Customer Service Overnight Sales Package to: Q Integrated Companies 3354 Perimeter Hill Drive Suite 141 Nashville, TN Check the AM website for specific contract addenda that may apply or for changes to the mailing address

68 Contact Information Q Integrated Field Service Manager (Area 6A) P K MANAGEMENT GROUP INC Name: Natalie Ramirez Address:8095 NW 12th Street Suite #400 Miami FL Phone Number:(786) Fax Number:(305) nramirez@pkmg.net Website:

69 The feedback, ideas, and concerns from the Agents are driving the changes that are needed to make this a smoother process. We need your Feedback!