Asked Questions about the Good Neighbor Next Door Program.
1) Who are you guys?
Rob Sipes and Robert Kaetzel of Real Estate Professionals, Inc. We are
real estate licensees in the State of Maryland and sell the majority
of the homes available under the program here. We have helped over 125
buyer clients purchase a home at a 50% discount with the Good Neighbor
Next Door Program. We are affectionately known by our clients as "The
Robs". We are also the preferred real estate agents in Maryland
who work in conjunction with Bruce Arrant, Good Neighbor Next Door Realty,
Inc, www.gnnd.com and www.goodneighbornextdoor.com.
We are the experts who can help you be successful with the Good Neighbor
Next Door Program (GNND Program).
2) What is HUD?
HUD is the Department of Housing and Urban Development, an agency of
the federal government.
3) How are you involved
with this program?
HUD says that if you want to purchase a Good Neighbor Next Door home
you must utilize the services of a HUD registered licensed real estate
broker. That's us!
4) Can I deal with any
real estate agent that I want?
Yes you can, however the agent's brokerage must be HUD registered. Not
every real estate brokerage is. It's a good idea to deal with someone
who has experience with the program as it can be a quite complicated
and bureaucratic. Most real estate agents have never participated in
a Good Neighbor Next Door sale. If they are unfamiliar with the program
and the process of navigating a Good Neighbor Next Door sale, they can
screw things up for you pretty badly.
5) How does a house become
a HUD Home and qualify for the Good Neighbor Next Door (GNND) program?
The Federal Housing Administration (FHA), which is a part of the Department
of Housing and Urban Development (HUD), provides federal mortgage insurance
to Mortgage Lenders. This guarantees that Mortgage Lenders will be reimbursed
in the event home buyers default on their mortgage. When a Mortgage
Lender is forced to foreclose on an FHA-insured single family home,
townhouse, duplex, triplex, fourplex or condominium because the owner
can no longer make payments, the Mortgage Lender can file an claim with
FHA for the balance due on the mortgage and convey title of the property
to HUD. If that home is in a geographically coded area declared as a
Revitalization Zone, then it may be placed for sale under the GNND program.
GNND homes are offered to participants BEFORE the General Public has
an opportunity to buy them.
6) Are all HUD homes
eligible for the GNND program?
No. Only a select few properties that are HUD acquired are available
for the GNND program. Do not wait for the perfect house or perfect location.
If a home is listed that you can qualify to purchase and it meets you
minimum housing needs, then always try to take advantage of the opportunity.
There is only a 36-42 month occupancy commitment and then you can sell
the home, keep it as a rental, or live in it as long as you want. Some
GNND participants live in their homes well beyond the three year residency
7) Where do I obtain
financing for the home?
You can use any Mortgage Lender of your choice and any type of financing.
However, to take advantage of the $100.00 down payment program, you
must use FHA 203B or 203K (renovation) financing. Please keep in mind
that it is difficult or impossible to combine other assistance programs
with the GNND program. It is also not usually possible to use a Veterans
Administration (VA) loan on most properties.
pre-qualified by a GNND lender
8) Can I bargain with
HUD on the price of a property?
No. The Lottery winner gets a 50 percent discount off of the listed
price. You can't offer less than or more than the listed price of the
home. All Good Neighbor Next Door homes are listed at the as-is appraised
value of the property. Appraisals are obtained prior to putting the
property on the market by HUD's management and marketing contractor.
9) How does the Lottery
process work and when will I find out if I won?
We have made it easy for you to enter the lottery on a property.
Just fill out our online
form at https://www.reprofessionals.com/good-neighbor-next-door-program/enter-lottery/
to submit your information to us.
The lottery drawing takes
place eight days after the house is listed, unless it falls on a weekend
or Federal holiday. All lottery entries must be received before midnight
(CST) the seventh day. All Winners are notified the following day of
the lottery. If the initial winner does not close, then the option to
buy the house goes to the backup entrant. Backup winners may be notified
weeks or even months after the lottery drawing has taken place however
you are under no obligation to move forward if you no longer want that
10) Why is my Social
Security number required to enter the lottery drawing?
This is HUD's requirement and it is the only way to make sure every
participant enters the lottery only one time on any given home and that
they have NOT previously purchased a GNND home. We use a secure page
and form to make sure that your personal information is secure.
11) What are my chances
of getting a home?
The chances of winning are directly proportional to the number of entries.
Many homes have been awarded to participants because they were the only
lottery entry. If one Teacher, one Firefighter and one Officer were
all in the lottery drawing for the same home, everyone has an equal
chance and 33% chance of winning.
12) What happens if no
one enters the lottery drawing?
If no one enters the Lottery for a home during the exclusive 7 day GNND
listing period the home will be marketed to the general public at full
price. The property will not be available for purchase under the Good
Neighbor Next Door Program again.
13) Should I look at
every home that becomes available before I enter the lottery?
Yes and No. Remember these homes may have been neglected for several
months prior to HUD taking ownership. HUD sells property "as is"
and does not fix them up for curb appeal. Make sure the area is right
for you and the repair escrow or 203K loan will take care of the house
fix up expenses.
On the more desirable properties
where there may be many lottery entries we usually recommend entering
the lottery and if you win you can look at the property and determine
if you want to move forward on it.
14) What if I win a home
and then change my mind about purchasing it?
If you enter the lottery on a property, win it and then choose not to
move forward on a property BEFORE you sign a purchase agreement you
will be eligible to bid on another home and the only thing you lose
is the opportunity to purchase that property.
If you decide not to purchase
the home after your contract of sale has been signed by you and HUD,
then you will lose your earnest money. If you are unable to get financing,
are subject to serious illness, job loss, or the death of immediate
family member, or for other good cause, then the earnest money will
be refunded to the Buyer at HUD's discretion. Any money spent on inspections
or utility connections will not be refunded.
15) What does IN, IE,
and UI mean?
HUD homes are listed three ways "IN" Insurable, "IE"
Insured with Escrow, and "UI" Uninsurable. This has nothing
to do with home owner's insurance coverage, and everything to do with
whether the property qualifies or meets minimum property standards (MPS)
for an FHA type loan. In order to obtain an FHA Insured Loan, FHA requires
that a home meet certain requirements and standards. "IN"
Insurable means the property in its present condition appears to meet
all minimum property standards to qualify for an FHA loan without any
repairs. "IE" Insured with Escrow means that there are some
deficiencies that do not meet the minimum property standards, but the
home does qualify for an FHA 203B with Repair Escrow loan. These deficiencies
or minimum property standards violations are things like a broken hot
water heater, minor roof repairs, peeling paint, missing flooring or
damaged drywall etc... It has been estimated by the appraiser of the
property that all the repairs would cost $10,000 or less to meet minimum
property standards. The Repair Escrow amount is not paid by HUD and
is added to the Buyers total loan amount. The Buyer has 30 days to make
the repairs and then after an inspection; your Lender releases the repair
escrow money to you. "UI" Uninsurable means that it has been
estimated that repairs needed to bring the property back up to minimum
property standards would cost more than $10,000. This property does
not qualify for FHA 203B financing, but as with most HUD properties
it does qualify for FHA 203(K) financing or 203(K) streamline financing.
FHA 203K Financing is a property acquisition loan and home improvement/repair
loan all rolled into one.
This part can get confusing
and we are available to walk you through the financing process to help
you arrange the financing that is best for you.
16) Should I get Prequalified
for a mortgage?
Yes! Get started on the mortgage loan process through an FHA Lender
who has experience with the 203K and 203B loan products as soon as possible.
You must be pre-qualified by a mortgage lender unless you are paying
cash. You are welcome to call your credit union or your own lender to
arrange for financing but in our experience this is a very bad idea.
Most credit unions don't do these types of loans. Most lenders have
never heard of the program and will likely screw it up. If you would
like to be pre-qualified for a Good Neighbor Next Door Purchase, you
can fill out our pre-qualification
request form. Once we receive your information, it only takes a
day or two for one of the lenders that we work with to get a copy of
your credit report and to call you. There is no cost or obligation to
17) What is the maximum
amount that can be financed for repairs on the FHA 203K loan?
You can borrow up to 110% of the total appraised value for acquisition
of the home, repairs, remodeling, upgrades, and appliances with the
regular 203(k). And up to $35,000 on the streamline 203(k).
18) Who makes repairs
and improvements to the homes?
On the FHA 203(B) with Repair Escrow, the Buyer hires a licensed Contractor
to make the needed minimum property standard minimum property standards
repairs ($10,000 or under). Prior to closing the Contractor must submit
a bid to the mortgage company which declares the amount estimated for
repairs is sufficient to cover the actual cost of the work. The money
held in the repair escrow account will not be paid to the contractor
or reimbursed to the Buyer until after the repairs are completed and
inspected. On an FHA 203(K) or 203(K) Streamline, only FHA approved
licensed contractors can make repairs and do improvements to your home,
but check with your mortgage lender for additional contractor requirements
such as references and/or credit checks, etc.
19) How long does it
take to close on a home?
Homes with an "IN" or "IE" designation usually close
in 45-60 days after the drawing. Homes designated "UI" usually
close 60 to 75 days after the drawing.
20) If I am moving to
another state when can I start entering the Lottery for homes in my
You can start entering the Lottery in other states as soon as your employment
can be verified and you are considered a FULL TIME employee in your
21) What if my spouse
or I own a home?
Current homeowners can no longer participate and you cannot have owned
any residential real property for 365 days prior to lottery submission.
Also, you are considered a current home owner if your spouse owns a
home or has owned a home within the last 12 months. Vacant land, vacant
lots, timeshares and any mobile homes or travel trailers that are taxed
as personal property are not considered residential real property in
22) Am I restricted to
bidding on properties in any particular area?
Currently Law enforcement officers may purchase any eligible
GNND home within a reasonable commuting distance from the officer's
employment. A 90 minute commute has been deemed reasonable in the past.
Teachers and Firefighter/EMT
purchasers are restricted to homes that are located in the areas
served by their employer. Examples: A Prince George's County teacher
can only purchase a GNND home located in PG County. A Baltimore County
firefighter can only purchase a GNND home that is located in Baltimore
County. A Baltimore City teacher can only purchase a GNND home that
is located in Baltimore City. Private school teachers can purchase within
the are served by their school. In some cases the private school teacher
may be able to purchase in another area near their school if the school
serves students in that area. If you have questions about where you
are able to purchase get in contact with us and we will help you.
23) How much earnest
money do I have to put down?
After the property has been awarded to the Buyer, earnest money must
be submitted with the contract for purchase and all GNND addendums.
The program requires 1% of the listed price to be presented at time
of contract submission in the form of certified funds (cashier's check
or money order) payable to the buyer's title company. The minimum amount
of earnest money is $500.00 if the listed price is below $50,000.00
and the maximum is $2,000.00 for homes appraised over $200,000.
24) How does the $100
down payment work? What about Closing Costs?
If you choose to take advantage of the FHA $100 down payment, then all
normal closing costs, repairs, improvements, broker commissions and
fees associated with the acquisition of the property are added to your
total loan amount and are part of your mortgage. You can choose to pay
these expenses out of pocket if you like but most people don't.
25) There are several
homes I want. Can I enter the Lottery on more than one property?
Yes! HUD does not allow you to choose homes if you are the winner of
more than one house. You will be awarded the first property won and
any subsequent wins will be passed on to the next entrant. The order
in which Lotteries are conducted is random.
26) What continuing obligations
apply to me if I purchase a GNND home?
Continue to own, and live in as your sole residence, the home you purchased
through the Good Neighbor Next Door Program. Certify initially and once
annually that this is true for three years. The residency requirement
is extended to 42 months if you utilize renovation financing.
27) What happens if I
get called to active military duty and get deployed?
Participants called up to active military duty and are deployed are
provided clemency in regards to the owner occupancy requirements of
the program for the time frame that they are deployed. Participants
on deployed military duty are not required to occupy the property and
are allowed to rent the property (only while deployed) if necessary
to minimize potential vandalism risk. Written permission must be obtained
from HUD prior to renting your GNND home if you find yourseld in this
28) How long do I have
to live in the GNND home?
You must live in your GNND home as your primary residence for at least
36 months after closing to receive the full benefit of the 50% discount.
This time is extended 30 days for an Insurable with Escrow property
and 180 days for a UI property purchased with FHA 203K financing. If
you get renovation (FHA 203K financing) the longest time that you will
be obligated to live in the property to receive the full benefit of
the 50% discount is 42 months.
29) Can I sell the Good
Neighbor Next Door Home and keep the profit?
Yes! After you live in the GNND home for the entire occupancy term,
you can sell the home and keep all the equity and appreciation. Most
occupancy terms are just 36-42 months.
We can help you sell the
property and move to your next one.
Some of our past clients
have profited $50,000 - $100,000.00 (tax free) after purchasing a property
and living it for the entire occupancy term.
30) What happens if I
fail to honor the 3-year residency requirement?
HUD can demand re-payment of the discounted amount on a prorated basis.
That means you would have to re-pay to HUD based on a percentage of
the 36 months (3 years) you owned and lived in the home. If you received
a $60,000 discount on a $120,000 home and sold the home after 18 months
(One and half years), then HUD will take $30,000 (half the discount)
from the proceeds of the sale. At the end of the occupancy term there
are no restrictions or penalties on the sale of the property.
31) I have a foreclosure
on my credit. Can I still participate in the program?
Yes, but FHA financing will not be available until three years after
the foreclosure. If you have the funds available, then you can pay cash
and not finance anything.
32) During the 3 year
occupancy term can I rent out my GNND home and live somewhere else?
No. Only if you are called up for active military duty and deployed,
then you may rent out or lease your GNND home after written approval
33) What if the winner
cannot close on the home they won?
If a lottery winner cannot close on the home, then a Backup participant
will be notified they have the option to purchase the home. A primary
Winner and two Backups are selected for each lottery drawing if there
are at least three participants. Backup winners could be notified of
selection in as little as 3 days or up to 3 months after the drawing.
34) How can I get more
Call or email us any time. You can reach Rob Sipes by calling 410-299-1051.
You can also contact us through our web form located at the bottom of