By: Mia J. Johnson

Having listed and sold HUD (Housing and Urban Development) properties for the past 15 years I have gotten pretty comfortable with all their acronyms. Sometimes I forget that buyers are left scratching their heads what I’m talking about. The biggest question I hear is, “what is a PCR?”.

PCR stands for property condition report. Every HUD property will have this report—you can find it on hudhomestore.com under ‘Addendums’. This report is filed on behalf of the government by the field service manager, also known as the FSM. These companies are in charge of cleaning out the properties, changing locks, and bringing in a generator to test the systems. They will check the heating and cooling systems, the electrical wiring, appliances that are present, plumbing and water heater, sewer or septic and the roof’s condition.

It is important to remember that the FSM has used a generator and some systems may not power up with just a generator. The government is in the business to promote home ownership–they want their buyers to be fully knowledgeable about the condition of the properties they are buying. This is why they give owner occupied buyers a 15-day period after the contract is accepted to have the electric and water turned on to have your own inspection performed by a certified home inspector. You are considered an owner occupied buyer if you plan on living in the home as your primary residence. It is highly recommended that you have the home inspected for problems so you can make a fully informed decision about the property being the right fit for you and your family. If you are investor, the government thinks that as a “professional” buyer, you should better understand the condition of the property.

My number one question from both agents and buyers is to explain when the PCR says, “compressor used to charge system and pressure did not hold”. This will be found under plumbing under the functionality/test notes section. The basic answer is that they used a compressor to blow air through the plumbing system to see if it would hold air pressure of 40 pounds for a thirty-minute period. If it does not hold the pressure, they state that it failed the pressure test. Why is this so important? Well the FSM does not find out where the leaks are, they just know there are leaks somewhere. If the plumbing system has failed the test, you will not be able to turn the water on for your inspection, but you are encouraged to do your own air pressure test.

The most important thing about this is that you inform your lender that you cannot activate the water for the appraisal. Many lenders and underwriters require that the utilities be activated during the appraisal as a requirement to approve the loan. You don’t want to be excited about your new purchase only to find out you won’t be able to finance the deal and actually close on it. However, there are other options that may work at this point—your agent and lender will able to direct you on what needs to happen. In the past, I’ve advised people to change their loan type, do the pressure test find out what is wrong and set up an escrow (lender permitting), or pay cash fix the problem and refinance later depending on the circumstances. Most importantly don’t give up if this is the home you have your heart set on. It may take a little work and time but there are options that you and your agent can explore to make the deal happen.

Feel free to call me and ask as many questions you like! I love unravelling the mystery of buying government properties.

Here are some of the common acronyms used in HUD properties and what the stand for:

• PCR = property condition report
• FSM = field service manager
• LLB = local listing broker
• LBP = lead base paint (required for properties built before 1978)
• O/O = owner occupied (buyer plans on living in the property as their primary residence)