Why Owner Occupied REALLY Means Owner Occupied

Many banks, in an effort to stabilize neighborhoods, are offering bank owned foreclosures for the first 10-15 days on average to owner occupant buyers ONLY.

And of course any rule means there will always be buyers calling to ask how to get around the rule, unfortunately.

Being deceptive about owner occupancy is serious business.

OK, so some people won’t lie about owner occupancy because   we all know lying isn’t right. But for those who aren’t opposed to lying just because your mother told you not to do it, there are generally stiff penalties for those who say they will owner occupy a home and instead use it as a rental or a resale property.

Getting your mail delivered to the property does not count as owner occupancy. Having your grown children live in the property while you live elsewhere or letting your sister, your buddy from your bowling league, third cousin etc live there does not count as owner occupancy. Owner occupancy means the buyer whose name is on the contract and on the deed plans to live in the property as their primary residence. Meaning you plan to sleep there, eat there, and watch TV there- ya know, live there.

Another frequent reason this comes up is when parents are buying homes for their kids to live in- this is still considered an investment and these offers should not be made as owner occupant offers. To clarify – loaning or giving your kids the money to buy a property with cash that they plan to live in and placing the contract and deed in their name- not an issue because they are the owner occupants. Buying the house and putting your name on the deed but letting them live there- issue.

Many large lenders ask buyers to sign an owner occupancy certificate stating the possibility for penalties and actions that could take place if the buyer misleads the seller about owner occupancy. The buyer’s agent and often the listing agent will be asked to sign as well stating that they have no reason to believe you don’t plan to live there. Many times as the listing agent on a bank foreclosed home I am asked to search the local county records for properties currently owned by the buyer. I am asked to disclose the info to the seller if something doesn’t seem right (ie. owner occupant buyer currently owns and lives in a $250,000 home but plans to owner occupy the new $5,000 foreclosed home they are purchasing- uhhh, red flag).

Also, keep in mind that if an investor following the rules does not get to make an offer on a property because another investor bid during the owner occupancy period fraudulently, that investor is likely to report that to the seller. Causing one investor to miss a good deal because another is not being honest is bad for business. These things are closely watched by the investor community.

Just because a property has a “no investor buyer” period does not mean investors cannot eventually buy the home … many properties in need of repairs often pass through the owner occupancy period with no takers and are opened up to the investors to buy. Remember owner occupants often need loans to purchase homes and getting lending and completing repairs on properties in need of TLC is often more of a challenge than owner occupant buyers are willing to take on- so keep a close eye on the expiration dates of these owner occupancy periods and be ready to make an offer.