Just recently, a New York City firefighter bought a $330,000 three-bedroom, one-bathroom townhouse in Queens for half the price — $165,000.
“It was a dump, but he can spend some money on it, get it nice and have something special,” said Bruce Arrant, owner/broker of the Good Neighbor Next Door Realty in Denver, Colo. “Anything in the five buroughs is going up in value all the time. It’s hard to find property in Queens.”
Department of Housing and Urban Development’s (HUD) Good Neighbor Next Door
This firefighter is among a few hundred teachers, police officers, sheriff’s deputies, EMTs and other firefighters who take advantage each year of Department of Housing and Urban Development’s (HUD) Good Neighbor Next Door program to buy its foreclosed properties at half price – yes, half price. Arrant has been educating and promoting this program to homebuyers throughout the country for more than a decade.
Participants that qualify can purchase property at a 50% discount from the current appraised value. And of course since the properties are foreclosed upon, many of them need extra tender loving care or a complete gut job and remodel. So, those approved to buy one of these homes can also apply for an FHA-insured mortgage and finance all closing costs, repairs, improvements, appliances and purchase expenses.
Arrant said that the program’s rules include that the EMT, teacher, etc. must live in the house as his/her primary residence for three years to take complete advantage of the grant. After that, they can sell it and keep the profit they have gained through a much higher value than they bought it for. Or they can turn it into a rental or keep on enjoying the fruits of their labor by living there a long time.
The Good Neighbor Next Door homes are listed within the HUD homes website – hudhomestore.com. However, Arrant said most people don’t look at the chart carefully. They usually make the mistake of not changing the “buyer type” section to Good Neighbor Next Door. Most people never even see that section. The map can be confusing, too, with two similar shades of blue which is supposed to signify whether or not a state has Good Neighbor homes available at that time.
Even realtors and lender’s get confused by the HUD map. That’s why Arrant built his own website – gnnd.com – so there isn’t any confusion. It states exactly which homes are for sale in the program and a listing of more than 240 real estate agents nationwide that Arrant has worked with closely to understand the program and how it works.
He also has more than 6,000 people registered as subscribers on his website, and half of those have opted for text messaging in case a new home is available in their area.
“Not every home on the HUD list is a Good Neighbor Next Door home. Only a select few are eligible for the program because they are selected from declared revitalization areas,” Arrant says. “Plus, there is only a short seven-day window to put your name in on a Good Neighbor house. They usually list new ones Tuesday-Friday.”
If more than two people put their names in the lottery drawing for a particular home, basically their names are put in a hat to be selected. They select two backup bidders if the primary winner doesn’t close on the transaction.
“Everybody has an equal chance. If there are three firefighters, three sheriff deputies and three teachers in a lottery, it’s completely random as who wins it,” he said.
But Arrant said that many homes that are listed for the program never get bought through the program. Sometimes, only one person puts their name in for it and gets it. But many times, they don’t follow through and actually buy the home for one reason or another.
“These homes are As-Is – meaning they aren’t necessarily in the best condition and do need repairs. But some are in great shape. All of that remodeling can be refinanced into the loan. Some people just don’t want to deal with putting in that work,” he says.
Arrant travels the country talking to police chiefs, firefighters and teachers. Many of them said that they had heard something about the program, but never heard how to pursue it.
“And the biggest problem about the program is that people think it is too good to be true. When we send out emails to entire school districts that there is property available, they usually delete the email thinking it’s some scam,” he explains.
The program actually started out as two programs in 2001 called the Officer Next Door and Teacher Next Door. They were sponsored by HUD but weren’t well known. In 2006, HUD combined those two programs, added firefighters and EMTs as eligible candidates, and changed the program to Good Neighbor Next Door. It was created by President Bill Clinton.
“We’ve had 23 properties awarded in January. But almost as many homes that were on the program’s list were pulled from the program and now just listed in the HUD home list since the first of the year,” he says. “Those are usually the more desirable ones that are priced at $25,000 or more.”