As an investor as well as a HUD-registered bidder, I have always placed each bid based primarily on my assessment about the condition of the house. And each assessment relied heavily on a Property Condition Report, which accompanies each HUD-listed property. PCRs used to be accurate and reliable – enabling bidders to place relatively accurate bids without having to check out the property in person until such time when a bid is accepted. This was not the case with the most recent bid I had placed, however. Not only was it inaccurate, it was downright misleading.
I called HUD to ask them how such inaccuracies were being allowed to be published. The response was that it was the listing agent that determined what went into the PCR and that HUD had no control over them. Hmm…
Such hands-off explanation, I thought, was typical of a government-run entity, which is not responsible for generating its own revenues or keeping costs under control – because it is funded by us, taxpayers. If HUD were a private company, such costly inefficiencies would never be allowed to continue. If it were, then HUD would die of its own weight for its inability to sustain profitability. Ask me how I know.
It appears that, for whatever reason, HUD has chosen not to set standards in terms of the experience level of the listing agents it hires to dispose of these foreclosed properties. Such practice is fine when properties are in move-in-ready condition and can be readily sold to retail buyers (i.e., consumers). The problem with this approach with most HUD properties is that, by their nature, they have repair needs in varying degrees. Especially those that are made available to investors, they need to be accompanied by accurate PCRs, as they used to be, and priced accordingly by those listing agents who do understand investor needs. If not, even the most die-hard investors, such as myself, would begin to ignore them so as not to waste time. When this happens, ultimately, HUD would end up carrying larger inventory unnecessarily – at taxpayer expense. As a taxpayer myself, this situation is not acceptable.
Happy investing!
