This BLOG is not meant for a seasoned agent or investor, it is a basic explanation of the differences between the two types of foreclosure sale properties.
HUD Homes
Housing & Urban Development owned properties obtained primarily through the default of an FHA or VA Loan and in some rare cases government backed block grant loans for urban revitalization. These properties are primarily marketed through a Regional Sales Company such as First Preston, Pyramid Realty and or a local service providing brokerage. These properties are typically sold on a Bid Process and require the assistance of a licensed real estate agent. HUD properties do not sell to the highest bidder but the highest Net Yield for the property. In certain markets such as revitalization areas there are instances when individual bidders who work for the local Police, Fire or Schools bids are given special priority. Generally an Owner Occupant will always prevail over an investor despite Net Yield as HUD's main goal is individual home ownership.
REO Homes
These are bank / lender owned homes that have been foreclosed on and are being marketed by a local real estate brokerage on behalf of the bank / lender. These homes are sold primarily in As-IS condition with the Buyer assuming all risk for the condition. REO properties are sold with a clear title where all liens have been cured or remedied. This is also a Net Yield business where the Buyer who offers the most money with the least costs to the lender / bank will be the new owner. Lenders offer no preference as a rule to owner occupants over investors except in rare occasions where the bank / lender may have numerous properties mortgaged on their books in that specific area. A good example would be a Condo or PUD where 1 lender was the primary or prevailing lender. At that point the bank / lender may take a lower Net Yield to keep the property as an owner occupied property to protect the values of the remaining mortgages.
Just a simple and brief explanation of the basic differences in these two types of foreclosed properties
Paul Moye
Your Middle Tennessee Real Estate Professional
For more information on REO and HUD properties in the Nashville Market contact me at
paul@middletnrealty.com
www.middletnrealty.com
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