Half-priced HUD homes are tough sell

Rules, compensation model offer little incentive for real estate agents

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jun. 23, 2011

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When I asked HUD about whether the "revitalization" areas targeted were really the markets teachers, police or firefighters would be interested in, the agency stressed the purpose of the GNND sales program was to improve the quality of life in distressed urban communities.

Pruitt still hasn't been able to conclude one GNND sale. "We tried a number of times and just haven't been able to have everything come together as it is supposed to," he said. "It's almost like the HAMP program. The government rolled it out, but you have to jump through so many hoops and meet so many requirements, it's difficult to get through."

Zane Gerringer, a Realtor with Allan Tate Realtors of Greensboro, N.C., also didn't have an easy time with his singular GNND transaction. His client, a teacher, put in an offer for a house in early January and it was accepted immediately. When I got in touch with Gerringer in mid-April, it still hadn't closed.

The problems were innumerable, including a change of HUD personnel in the state. When I to spoke to Gerringer, he said, "We have gotten through inspections and that was another ordeal. The forms are really confusing just to get the utilities activated."

As if HUD didn't have enough problems getting the message out about GNND, it may now have lost it best marketers: the real estate agents.

"The other weird thing about GNND," Gerringer said, "is that HUD has decided they are not going to pay agents, although a HUD-designated agent has to be in place to make a bid for a GNND home."

For compensation, Gerringer had to turn to his client. "I'm only charging him 3 percent because it is coming out of his pocket. HUD used to pay Realtors 5 percent for helping someone buy a HUD foreclosure."

Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-selling real estate investment book for the Amazon Kindle e-reader.

Contact Steve Bergsman:
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