In February we received a call on a property that had been foreclosed on

by HUD (Housing & Urban Development).  The buyer was looking to

purchase the house and rehab the property.  When we met the buyer,

his thoughts were to purchase it and put  his daughter in as a tenant.

This sounded like a great idea and after looking as his 401k, he decided

a smart use of what money he still had in his account.

In Michigan the process to buy a HUD-owned home is similar to a

number of states.    The offer is presented on line –  if you are successful

in your bid you have 24 hours to supply the paperwork to the attorney

firm that is handling the process.

All went quite well and HUD accepted our offer on the property.

HUD-owned house

Now we wanted to do inspections. As is typical in vacant HUD properties, we

need to turn the utilities on to do the inspections. The local power company

would not turn the power on  until an electrical upgrade was completed.

We called the attorney firm and they indicated another department in Arizona

took care of that. It would take a few days to get the quotes in to authorize

the upgrade. As it turns out, they need  3 quotes and the guy in Arizona

only had 2 approved contractors. After a few weeks of waiting we did our

own quote and called the attorney and asked if we could do the upgrade

at no cost to HUD and then do our inspections.

electrical wires cut

The answer: No, they would not allow anyone in the house that was not


I went through the layers of management to get to a supervisor that

indicated he “was all over this” and he would make it happen. Another

month of phone calls and frustration finally got the bids in and received

a call from another department.

This department indicated the bids were in but now they had to check

with HUD to see if they would do the work since all properties were

purchased “as is”. I asked why they did not mention that we would not

have the opportunity to do our inspections before we had gone through

nearly 3 months of waiting.

HUD foreclosure notice

He did not have an answer but would get back to us.

Finally approved but the approved contractor could not get to the job

for a while.

The buyer, totally frustrated by now, decided he still wanted the property.

With nearly  3 months of phone calls and lack of action by HUD, he

offered to buy the home without inspections, if  they would give a

credit at close for the electrical repairs.

The calls were made and the approval granted. FINALLY!!!

Now we have 3 days to get the home closed before the offer expires.

If not closed in 3 days, we would have to file for an extension of the

agreement which might cost the buyer because he had not closed in

a timely manner.

We did close on the last possible day without too much issue.

Why do we do this?

Because the buyers are so happy!  The Buyer’s daughter actually bought

the  home and has a mortgage from the parents so she can get the

First Time Buyer Home Credit”.

They are happily cleaning and preparing to move in to the home. 

The electric is upgraded and the repairs are being completed.

The moral of the story:

In this housing market, buyers that never would have been able

to buy can own a home ——- if they have patience to go through

the process.  Short Sales and Foreclosure Sales are not the usual real estate

transaction.  You will need patience  with a capital “P” and an agent that is

familiar with the paperwork and legalities involved in these type of sales.

They are frustrating and time consuming, so don’t expect to finalize these

sales in the normal amount of time, i.e., 1-2 months.

**Note: Having a parent or relative fund the mortgage is another option

to a bank  mortgage.

The $ Benefits of the First Time Home Buyers Tax Credit

Buying Foreclosed Homes is NOT FUN

If you have the patience to buy a HUD-owned home or a foreclosure

Home, please contact us at 1-888-240-1968 ext 0 or email us at:

Grand Rapids Ada Real Estate ~ Westbrook Realty

Copyright 2009 All rights reserved