Shannon Judd On HUD Market Inventory
Joe interviews Pemco's Shannon Judd about HUD inventory in the market place.
Hi, Joe Hafner here. I’m here with a shy young lady, Shannon Judd, who’s the project manager at Pemco, who’s one of the three asset managers in Middle Tennessee handling HUD homes. We work with them on selling HUD houses, and she has kind of a unique perspective on the market dealing with HUD directly and seeing what’s going on in the marketplace. And we really just want to start, Shannon, by asking you what is your projections for what’s been going on with all the inventory that’s out there, the foreclosures, all that? What do you see happening in the marketplace in the next couple of years?
SHANNON: Okay, well, I really think that you’re going to see at least steady if not an increase, especially with your predominant HUD homes. HUD homes are FHA foreclosures. Back in 2006, the estimates were that FHA represented about 3% of the mortgage market. The projections now are around 60%. So if you look at the volume of HUD that you have now in your area and you times that by now up to 60%, regardless if foreclosures become stagnant or at least stabilize, HUD is going to become your predominant foreclosed property in your area.
JOE: So what percentage of the market as a whole across the nation would you say is HUD right now of that type of property?
SHANNON: As far as foreclosures go, I still think that we’re up and coming. HUD is the largest residential reseller of real estate in the entire world. I think recently they had one of the most largest sales months across the country of any—and I think that number was somewhere around something like 8,000 across the country. And that’s just sales and not just closings. So I think that we still represent maybe about 30% of the market share I would say across the country.
JOE: Okay, now if we bring this a little more local for like our viewers in Middle Tennessee, you all manage HUD properties across the nation.
JOE: But what makes a HUD home different than say a bank-owned property or a short sale or something along those lines?
SHANNON: Well, I think when you deal with HUD, you kind of get a little more transparency, and if you set your expectations like you say accordingly, you can set your time frames a little bit better. When you’re dealing with a bank-owned property or even a short sale, you don’t have a timeframe. You don’t know if they’re going to accept your offer. You don’t know the process, if it’s going to be the same from A to B to Z, where on HUD, it’s always going to be the same.
Even when you’re dealing with different asset managers, our bidding cycles are mandated nationwide. So you know exactly when that auction or bidding cycle’s going to end. You know exactly when you’re going to find out if your contract was accepted. And then the protocol becomes uniform from that point. And I think when you’re dealing with foreclosures, especially for a buyer, that’s a nice sense of security to know that you actually have a timeframe.
You also get your HUD FHA as-is appraisal. Before you ever bid, you know that price. So when you’re dealing with other contracts in any kind of real estate right now, I think we can all agree that we all kind of cringe the day the appraisal’s coming in from the appraisal management company.
SHANNON: Is that contract going to remain viable after we see this appraisal? Where that’s not the case on HUD. You get that appraisal value prior to ever submitting your offer. And you’re going to get a copy of that at no charge for your lending purposes as well.
JOE: Okay, so obviously as an asset manager for HUD, you’re a big advocate for HUD. We have viewers who are potential buyers, potential sellers, real estate agents, across the board. What message would you want them to know about HUD houses?
SHANNON: I think HUD is an excellent home ownership opportunity, but it’s also an excellent investment opportunity. We definitely market our properties tailored toward their condition. So we want those great houses that are move-in ready to go to homeowner occupants. We’re trying to promote home ownership. But I think that investor think that we’re not big fans when we actually really are. So no matter what your clientele is, we have a HUD home for you.
And I always say because of that predominant FHA market that is coming through that foreclosure wave now, just because we don’t have one in your area today, doesn’t mean we won’t have one tomorrow. And it’s really, really important to familiarize yourself with the process because it’s not more complicated. It’s just different. And as soon as you figure out those nuances, you can become very successful and it’s a very lucrative real estate transaction.
JOE: Okay, and what resources are available for people out there who are agents who are interested in selling HUD properties and buyers who are interested in buying them?
SHANNON: Well, I would say our great local listing brokers like yourself. One of the greatest things they changed with this new process is their commission split and you guys are there to provide that customer service. So call your local listing broker; get that education. We also do offer the education through your offices as well as through the boards. We have a YouTube channel. We have online customer support. We have a Facebook. All of these resources, our great customer service team here at Pemco, and just ask the questions. Read the instructions. Learn. Use the tools that are available to you because like I said, the better you get at this, the more you’re going to want to just sell HUD.
JOE: Well, Shannon, thank you so much for joining us. We really appreciate it. And we’ll see you again next time.