An article in the Jan. 12 Real Estate section incorrectly stated benefits to buyers of homes in the Department of Housing and Urban Development inventory.
Through the end of February, buyers who plan to live in homes insured by the Federal Housing Administration pay just a $500 down payment. Owner-occupants or investors can get a $300 bonus if the sale goes to settlement within 30 days of HUD's accepting a contract.
The Sun regrets the error.
Hoping to boost its single-family home sales and reduce costs to taxpayers, the Department of Housing and Urban Development has designed a pilot program for Maryland and two other states to turn its properties over to a single, private contractor.
The move to have one contractor oversee and sell houses in HUD's inventory should lead to more efficient sales and reduced government costs of owning and maintaining homes, HUD officials said. The department chose Maryland and parts of Louisiana and California for the experiment.
Golden Feather Realty Services Inc., a nationwide real estate services company based in San Antonio, was awarded three one-year contracts, all of which the company competed for separately.
"Our desire is to lessen the amount of time HUD owns the properties and get the highest value we can for the property," said Larry Basinger, executive vice president.
As of Oct. 1, the company has managed and sold properties controlled by HUD offices in Baltimore, New Orleans and Sacramento, Calif. -- offices HUD chose as samples of those handling high, midrange and low inventories respectively.
The Baltimore office, which represents all of Maryland except Montgomery and Prince George's counties, has an inventory of 650 to 800 homes, two-thirds of them in the city. The Sacramento office typically handles 200 to 300 properties, while the New Orleans office handles an inventory that falls somewhere in between, said Candace S. Simms, director of HUD's Single Family Housing Division for Maryland.
HUD typically assumes ownership of properties with mortgages insured by the Federal Housing Administration when borrowers can't make payments and lenders foreclose. HUD then pays off the balance of the mortgage and tries to sell the home. It often takes the agency six to eight months to sell a home.
Under the pilot program, in fiscal year 1997 HUD expects to sell 1,267 homes. In fiscal 1996, 993 homes were sold, while 895 were sold in 1995, Simms said.
FHA Commissioner Nicolas P. Retsinas put the pilot program in place after determining offices were understaffed to handle a process that includes taking ownership of foreclosed properties, handling minor repairs and cleanup, appraising, devising a marketing strategy, listing and selling homes, and following through on the closing.
In the past, HUD's Maryland office has hired a property manager and exclusive listing brokers in some rural areas and contracted with appraisers and inspectors. HUD staff did administrative work and marketing.
"The commissioner designed this pilot to see whether it would be more efficient and effective to have one major contractor handling these functions," Simms said. "If a home is listed sooner, and we're getting people to look at it, hopefully it will not remain on the market too long. It reduces the chance of vandalism and the cost of having to make repairs."
In one of its first steps representing HUD, Golden Feather Realty -- which opened a Baltimore office on North Calvert Street in October -- is offering financial incentives to buyers and their real estate agents, said Shelagh N. Davidson, a Golden Feather vice president and head of the Baltimore office.
Through the end of February, buyers who plan to live in the homes can get $500 off their down payments. Brokers can get a bonus if the sale goes to settlement within 30 days of HUD's accepting a contract. HUD also will contribute up to 5 percent of a buyer's closing costs.
"That's a big advantage to somebody buying a HUD home," Basinger said.
The office also has been running weekly orientations for brokers and real estate agents.
"Certainly, we want to encourage more [agents] to do this," said Davidson, who said agents selling HUD homes usually work with first-time homebuyers who don't have a home to sell. The agents "don't have to generate listings. They just generate sales. It can be very lucrative."
That's because a cooperating agent or broker -- that is, someone who finds a buyer -- can earn up to 6 percent in commission, rather than splitting the commission with a listing broker as in a conventional sale. Golden Feather is paid under its contract with HUD.
The company markets the homes via a Web page on the Internet, newspaper advertisements and a fax-on-demand service. The homes currently for sale range in price from $2,000 to $130,000.
Bids, on behalf of buyers, must come from HUD-certified real estate brokers or agents and be submitted to Golden Feather, which opens and makes decisions on bids every day.
Only owner-occupants can bid on homes for the first 10 days after the initial listing. Bids during that period must offer at least 89 percent of the listed price. Afterward, investors may put in bids.
The agency will also take over the running of the mass auctions that HUD has found to be an efficient way to clear hard-to-sell properties from its inventory. The agency hopes to hold the next auction in March.
The Baltimore office has 13 employees, but contracts out for some services, such as property maintenance. All properties are appraised and inspected twice a month.
Anyone interested in purchasing a HUD home should contact a real estate agent or broker.
Pub Date: 1/12/97