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When most of us hear the word “Lottery,” we start mentally spending the $100 million dollars we’ll get if we win. Though, not going to lie, I still have the occasional disturbing dream leftover from reading Shirley Jackson’s short story, “The Lottery” when I was a junior in high school decades ago. The Hunger Games by Suzanne Collins begins with a lottery and JK Rowling’s Goblet of Fire in the Harry Potter book of the same name was a lottery system.

So, what is a lottery?

Merriam-webster.com lists the definitions for the word lottery as:  

1a : a drawing of lots in which prizes are distributed to the winners among persons buying a chance

b : a drawing of lots used to decide something

2: an event or affair whose outcome is or seems to be determined by chance

For HUD’s Good Neighbor Next Door Lottery, definitions 1b and 2 are the most accurate definitions.

Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return the buyer must commit to live in the property for 36 months as their sole residence. During the three year period, the buyer will be required to re-certify their residency yearly.

 

During the Lottery round, qualified buyers will bid on the property at the full price. If more than one bid is received, the winning bidder is chosen by randomized drawing (hence, the term “lottery”). The winning bidder will then be eligible to purchase the home for 50% of their bid. The buyer's will obtain a mortgage for 50% of the list price (plus any closing costs and commissions) and then at closing, sign what is known as a silent second. As long as the purchaser maintains the qualifications of the GNND program, they do not make payments on the second mortgage. Once all requirements have been fulfilled, the second is forgiven.

 

Because Good Neighbor Next Door properties are so limited, there is a lot of competition for them.

When a GNND is available, a lot of agents call and want to know how they can improve their offer. Recently, we had a GNND come on the market and an agent called wanting to know if her client could offer over the list price. If you’re wondering, the answer to the first query is nothing, and the answer to the second is no.

The GNND offer is prescribed by HUD. It will be for full list price, no closing costs paid, no commissions paid. The “winner” is chosen randomly from all the Good Neighbor offers received. It is the electronic equivalent of pulling a number out of a hat.

To be clear, the Good Neighbor Next Door Program is a FABULOUS program for those who give so much to our communities, and every single person who participates in the GNND lottery deserves to win, but sometimes it’s just about the luck of the draw. But winning this lottery is well worth the patience needed to get a property at this incredible discount.

So, GNND eligible participants, the question you gotta ask yourself (Dirty Harry-style) is do you feel lucky?

 

About the Author

Tony Smith is a second generation REALTOR® and owner of Wanda Smith & Associates with over twenty years handling Real Estate Owned (REO) properties and is proud to represent HUD through KM Minemier & Associates Real Estate Services.  Licensed for 35 years, Tony has been active in leadership in the industry for decades; he is past president of the North Carolina Association of REALTORS® (2015) as well as past president of the Charlotte Regional REALTOR® Association. He is currently a Federal Political Coordinator for the National Association of REALTORS®. Tony is a passionate advocate for both REALTORS® and consumers in today's fast moving real estate market.