I am often asked, “Where are the HUD Homes for Sale?” The simple answer is “Not in Maui.” A search today on the HUD site shows that in all of Hawaii, there is just 1 listing in Kauai. There are dozens of “HUD” sites that advertise homes in ALL 50 states. Caution: they are not run by HUD and they often are just a different (and not very good) search for all homes on the market.
When I’m asked about HUD homes, my first step is to clarify why people are looking for HUD homes. In many cases, people have heard that you can buy HUD homes for pennies on the dollar. Some want to fix them up and resell them at market prices. Some just want a good value home to live in. We often don’t understand how HUD acquires homes. According to HUD, “The homes that HUD sells come into HUD’s possession as a result of defaults on FHA (HUD) insured mortgages”. The reality is that HUD gets them when no one else wants them! You usually find HUD homes in areas where there are thousands of bank-owned properties. The people that do buy them often acquire “in bulk” which is part of why they get such great prices. The homes are not in liveable condition. The cost to “make a home to a livable” often exceeds the price paid for the house. So people need money, usually cash to buy a HUD home. Usually the property has already been listed as an REO (bank-owned property) and has not sold. If it has not been able to be sold, it is turned over to HUD to see if it can be used in one of their many programs.
Let’s get back to our beautiful island of Maui. Although we do have a lot of foreclosures (50% of sales last month were bank-owned or short sales), we have very few properties where the land value is so low that you could buy them for “pennies” on the dollar. Does that mean you shouldn’t look for deals? No! There are lots of good deals and even some opportunities for “flipping”.
There are many first time home buyers or first-Maui home buyers that are looking to find a home to live in Maui. Good deals abound! Get pre-approved before looking because good deals go fast! When you find the perfect home that works for you, you don’t want to find out that you can’t qualify or worse yet- that someone else gets it while you are waiting for approval. The average days on market for bank-owned properties is just 129 days. When you figure that that most properties have a 45-60 day close, that means market time is short. One property sold in just 23 days! The best deals often have over 20 showings within days are under contract within a week.
For people looking to flip property, the biggest challenge comes if you need financing. Financing is so tough recently that the property needs to meet minimum standards which in many cases will negate the opportunity to do work to flip it. Our market is still on slight decline so that becomes a risk that many don’t want to handle. If you want to look for flip opportunities, it is usually in mid or high-end properties that need basic cleanup, new paint and some landscaping. But even then, don’t look for HUGE returns and budget carefully.
How do you find great deals? The first thing to remember is that everyone is different and what one person thinks is a great deal is a non-starter for many. It is essential that you work with a great REALTOR who can set up search criteria for you and send results directly to you email. It doesn’t matter if you are “just looking”; don’t waste your time! Just call me at 808-344-0469 or send me a message. Check out my new site for searching properties and you can set up your own notifications! And subscribe to my newsletter where I share Best Buys as well as tips on how I determine that they are good buys!