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Adapting Terry Watson’s “Three Sheets” for the HUD Sales Process by Tony Smith, Wanda Smith & Associates

August 15, 2018

In last month’s blog post, I talked about the great Terry Watson’s “Three Sheets” for a real estate transaction. The sheets are a wonderful tool for agents to communicate with buyers and sellers and convey things we, as agents, already know and take as a given, that our buyers and sellers might not know or understand. It occurred to me that the “Three Sheets” could be adapted for the HUD process.

Sheet #1: Things You Absolutely Should Not Do!

  • Don’t go to a HUD home without a HUD registered agent.
  • Don’t mislead your agent about your status as an owner-occupant or investor.
  • Don’t delay submitting an offer.
  • Don’t delay executing paperwork.
  • Don’t delay getting EMD to the listing agent.
  • Don’t turn on utilities without the FSM’s approval.
  • Don’t go to the inspections without your agent.
  • NEVER make any changes or repairs to the property before you own it.
  • Don’t fail to request an extension of contract at least 5 days in advance of contract expiration if an extension is needed.
  • Never, ever, never move in before the property deed has recorded.

 Sheet #2: Frequently Asked Questions

 

  • I’m buying this house for my mom. That makes me an owner-occupant, right? No. If the contract is in your name and not your mom’s, but your mom will be living there, no, you’re an investor. Now, if you add your mom’s name to the contract, then she is the owner-occupant.
  • My bid was accepted, but why do I have to give the EMD to the listing agent instead of my agent? This way HUD monitors the receipt and handling of EMD. The listing agent or HUD Local Listing Broker verifies receipt and amount of EMD with the HUD Asset Manager and uploads images directly to their system. 48 hours prior to closing the transaction, the LLB will deliver the EMD to the closing attorney.
  • Will HUD turn on utilities? No, but with the Field Service Manager’s permission you will be able to put the utilities in your name to do inspections.
  • Has HUD already done a full inspection on the home? No, but ask your agent for the PCR (Property Condition Report) from HUDhomestore.com. It in no way substitutes for an inspection, but it will let you know if the major systems are functioning well enough to activate utilities.
  • Do I really need an inspection? YES. Yes, you do.
  • Can I arrange for lender required repairs to be done? No, but FHA 203b allows for a repair escrow on HUD homes up to $10,000.
  • I just want to run by and show my Aunt Edna Sue the house I’m buying. I can do that whenever I want, right? If you’re just driving by, sure. If you plan to get out of your car and walk around, you need your agent present.
  • Can I move in before closing? No.
  • Well, I wasn’t going to move in really, just put some of my stuff in the garage. That’s ok, isn’t it? Nope. Not even a cotton ball.
  • OK. When can I move in? After the deed has recorded.
     
    Sheet #3: This Might Happen
     
  • There may be multiple bids on the property, but there is no way to know how many bids have been submitted. If you want the home, put in your best offer so you have no regrets.
  • If your offer was lower than the minimum HUD was willing to take, you might get a counteroffer. The counteroffer will be the minimum net to HUD that HUD is willing to accept. You will need to add back the commissions and any requested closing costs to get your bid number.
  • You gave them the counteroffer they asked for and they still rejected you. HUD will state on a counteroffer they may be countering more than one buyer and to do your best. If they accept another offer, then that offer was better than yours.
  • If another offer was accepted, but you checked “Keep This Offer As a Back-up,” if the original offer falls through, then HUD may accept your offer later.
  • If the FSM will not allow you to activate utilities, you will need to decide how to proceed without utilities or terminate your contract.
  • If you are an owner-occupant and your inspection is unsatisfactory and you want to terminate, you will need to provide proof of issues along with the termination form.
  • If you want to change a buyer’s name or add a buyer, be sure to use the correct form.
  • If for some reason your lender cannot make closing happen by the expiration of the contract, you might need an extension. Be sure to request your extension 5 days prior to contract expiration.
      
    I'm sure there are some we haven’t thought of yet, but these are a good start for the HUD buyer and the HUD agent. Happy selling!

Tony Smith sMALLER.jpg

 

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.

 

 

 


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