Any homebuyer on the market right now will tell you the crowd of buyers and multiple offers are creating a challenge.
Those in search of distressed homes owned by the U.S. Department of Housing and Urban Development are not immune to this supply-and-demand situation. In fact, recently one HUD home in San Diego attracted 100 offers within 10 days.
"In this market, because it's so competitive we're seeing buyers just happy to get a house. They are being less selective on location and condition," said Whissel, broker/owner of Whissel Realty.
But in its latest news report, RealtyTrac reported that an uptick in homes owned by HUD may create opportunities for patient buyers.
Experts project that over the next two years, as lenders steadily work through a backlog of foreclosures delayed by foreclosure-processing reviews, the supply of these HUD homes will increase significantly.
In the western part of Riverside County in California, HUD-owned home sales are increasing significantly.
"HUD sales have increased due to the hold back of bank-owned homes for robo-signing reviews, and, most recently, the Homeowner Bill of Rights," said HUD local listing broker Nat Genis.
Genis added, "Inventory is there, just not being released during the banks/servicers review of the loan/mortgage documents."
"In the case of HUD properties, HUD homes are back," he continued. "FHA financing went away with the 'creative' financing of the 80/20 loans, and now with the increase of FHA financing, these government-backed loans guarantee that if the borrower defaults, HUD will pay off the mortgage, obtain the deed and re-sell the home."
Even though they can be in poor condition, HUD homes are often appealing because of their discounted selling price.
In this highly competitive market, it’s important for buyers to understand the ins and outs of HUD-owned foreclosures, writes RealtyTrac, and the best practices for pursuing and making offers so they have the best chance of landing a HUD home at a good price.
As of February 28, 3012, HUD had 39,442 properties nationwide in its REO inventory. Of those, 20,536 had pending contracts on them, according to a source at HUD, while another 9,505 properties remained on the market.
For investors looking to focus on HUD homes, Tammy Phelps, executive director of the District Real Estate Investors Association in the D.C. metro area, says working with a HUD-approved broker is key.
"They have direct access to these homes, are educated and have the knowledge to navigate what could be a complex situation with arduous paperwork," Phelps said. "They also have the time and ability to monitor the HUD website. If there is a specific property you are interested in then this is where your relationship with your agent is extremely valuable."