3b. Listing brokers and buyer agents
3c. Different buyer agency relationships
3d. How to find a quality agent
Read the full Chapter Three in one page
Before looking the HUD home buying process, it is important to understand the role of real estate agents in the process. Buyers must understand that they cannot submit bids on HUD homes on their own. A real estate agent that is registered with HUD and with a HUD NAID (name and address identifier) may place a bid on one of these properties. Although some brokers and real estate agents believe they can sell HUD homes, simply because these homes appear on local MLS (multiple listing services), this is not the case.
A registration package must be submitted by them to HUD if they are to be eligible to sell these properties and the registration must be updated on an annual basis. It is possible to find local brokers and agents that are qualified to sell HUD homes by using the broker search on the official HUD website, HUDHomeStore.com.
The Job of Local Listing Brokers
In areas where HUD homes are located, Local Listing Brokers are hired to offer full listing services on local HUD owned properties. Several responsibilities are given to these Local Listing Brokers. First, their job is to make sure that HUD government foreclosures are listed on the MLS. These agents also ensure that routine reports and inspections are prepared. It is their job to ensure the property is prepared for showings and to provide keys or other devices for home entry to selling brokers in the area.
Local Listing Brokers also have the responsibility of holding open houses and of offering information resources and customer resources on listings they oversee. They work to offer the HUD properties wide exposure on the market as well. In some cases, certain states allow brokers to work as dual agents, which means that Local Listing Brokers in these areas can work with buyers as well.
Using the Local Listing Broker vs. Using an Exclusive Buyer’s Agent
Since some states allow dual agency, which means that those with a real estate license may work with the buyer and the seller, a Local Listing Broker can work with the buyer who wants to bid on one of the available HUD homes in the area. While buyers may have the option to call and work with the Local Listing Broker, is it really a good choice?
Before deciding whether to use the Local Listing Broker on government foreclosures or to use an exclusive buyer’s agent, it is important to consider personal factors, as well as the pros and cons.
- YES! – For buyers that want to ensure that the agent they use is well informed on the HUD homes market, using the Local Listing Broker may be a good idea.
- YES! – Is time a premium? If so, once again buyers can benefit from using the Local Listing Broker.
- YES! – If buyers can help to negotiate a decrease in the commission on the home, it may help them increase the chance that their bid will be accepted. A lower commission will ensure that HUD enjoys high net proceeds from the home, increasing the chance that the bid will win. In this case, it may be beneficial for buyers to consider using the Local Listing Broker.
- NO! – Buyers that already have an excellent relationship with a quality real estate agent should continue to work with their exclusive buyer’s agent instead of calling the Local Listing Broker. This is also true for buyers that already have a buyer broker contract with an exclusive buyer’s agent.
- NO! – For buyers that prefer to have sole representation, finding an exclusive buyer’s agent that is an expert in HUD homes is a better choice than using the Local Listing Broker.
Different Buyer Agency Relationships to Consider
As buyers consider using real estate agents to help with the purchase of HUD homes, several different buyer agency relationships may be encountered. In most states, entering a business relationship agreement with a real estate broker or agent will give the agency or agent certain responsibilities to the buyer. However, various buyer agency relationships exist. The following are several of the buyer agency relationships that are available to buyers in most areas around the country:
- Non-Excusive Buyer Agency Relationship – This relationship allows the buyer to work with several agents at a time. Whichever agent helps the buyer make a purchase will be the one that receives the commission on the HUD home.
- Exclusive Buyer Agency Relationship – In this relationship, the buyer is not permitted to have a relationship with another agent while the agreement is in place. The exclusive buyer’s agent will be paid a commission or a fee for their services when a property is purchased and settled.
- Transactional Agency Relationship – Buyers can have the agent in this relationship prepare specific documents for a home purchase. However, this agent offers no consultative series or counsel to the buyer.
Without a written agreement between the buyer and the agent, certain services are not available. For instance, a buyer may only be offered a quality market analysis that enables them to figure out fair market value before placing a bid if they are working within an agency relationship. Within an exclusive buyer agency relationship, the buyer and agent are committed to working together and the agent promises that they will act with the best interest of the buyer in mind.
Since HUD homes come with fierce competition, using an exclusive buyer’s agent is an excellent option and will offer buyers with a competitive edge. A quality agent that is working in the best interest of the buyer will work hard to ensure that the buyer gets the winning bid. Establishing a relationship with a tech savvy real estate agent is important as well, since this can have an impact on bid success.
Tips for Finding a High Quality HUD Home Real Estate Agent
A high quality HUD home real estate agent is an agent that will be representing the buyer instead of actually selling HUD homes. In most cases, buyers will quickly find that various HUD approved buyer’s agents are available in their area. This can make finding a good agent tricky at best. Before making a choice, it is important to carefully consider the qualifications of the agent. The following tips for buyers will make it easier to hire a high quality HUD home real estate agent.
Tip #1 – Ask About Successful Negotiations
For buyers to find a quality HUD approved real estate agent, one important tip is to ask the agent about successful negotiations in the past. One of the most important skills for buyer’s agents is the ability to negotiate successfully. A skilled negotiator can save buyers thousands of dollars on HUD homes. Ask the agent about the most they have negotiated from a purchase price within the past year to better judge their ability to negotiate successfully.
Tip #2 – Ensure the Agent is Familiar with the Local Real Estate Market
Buyers must also ensure that the buyer’s agent they choose is familiar with the local real estate market. When buyers decide on a particular area where they want to buy, a good HUD agent will know the local area, which allows them to offer the best insight on neighborhoods, local prices and reasonable home values.
Tip #3 – Look for Agents with Previous HUD Experience
Another important tip for buyers to remember as they search for a high quality HUD real estate agent is to look for agents that have previous HUD experience. Purchasing government foreclosures is a big step and a huge investment, which means that buyers should not work with agents that are new to HUD homes.
Choosing agents that are familiar with the HUD bidding process can make a huge difference in the success of a future bid, so buyers need to ensure they only choose an agent that has plenty of experience in this area. When trying to ensure an agent has plenty of HUD experience, it may be a good idea to ask the agent how many HUD transactions they have completed within the past year.
A quality HUD real estate agent can save buyers energy, time and money. However, the wrong agent can lead to disaster. While it may take a bit of work to find a highly qualified buyer’s agent, it is worth the extra effort that it takes.