Week Five Assignment

Internal Environmental Scan/ Organizational Assessment 10

Internal Environmental Scan/ Organizational Assessment

Monique P. Garland

Argosy University

Executive Summary

This report is providing a detailed analysis for The Department of Housing and Urban Development. During the analysis there are many areas that will be reviewed such as mission, vision, and values, strategy clarification, and cultural assessment Another area that will be reviewed and evaluated will be the value chain analysis and a summary of the findings will be provided. Other methods of this analysis will include identifying the most important strategic issues that are facing The Department of Housing and Urban Development. A SWOT Analysis and Balanced Scorecard will also be completed throughout this report as results of the information that is going to be analyzed will show that HUD is not below the industry standard, but needs help to remain current. In comparison with many industry leaders HUD lack in the areas of property value, holding cost, agent incentives, property repairs, and non-performing contractors. This report will find that HUD in its current position are not all positive. The areas that ate mention are considered weak and causing the department to lose the maximum amount of profit that can be gained from the sale of each property. Recommendations would include adjusting the time in inventory for each property, increasing selling broker commission to industry levels of at least three percent, allowing a dollar amount to be given for repairs if the property sells overs hundred thousand dollars, and allow HUD employees to cancel contracts for contractors that are not performing according to HUD standards. The report will also investigate that there are some limitations that could potentially hinder the analysis such as detail of past performance for each HUD contractor might not be available, and accurate numbers might not be available for HUD staff to determine if additional funds and be given for repairs.

Table of Content

Executive Summary:

Introduction-

Mission, Vision, and Value Assessments

Strategy Clarification

Cultural Assessments

Value Chain Analysis

Summary of Key Findings

SWOT Analysis

Balanced Strategic Scorecard

References

Introduction

During week four student were required to completed an internal environmental scan along with an organizational assessment for the organization that has been used throughout the course. The agency that was used is The Department of Housing and Urban Development which is located in the Atlanta, Georgia. This agency deals with all facets of real estate such as single family, multi-family, and public housing. During this week’s assignment student were asked to completed three parts which included an internal environmental scan, part two was the company SWOT Analysis, and part three balanced strategic scorecard. The report will be wrapped up with a conclusion with all major points.

Internal Environmental Scan/Part One

Mission, Vision, and Value

HUD has a very simple mission which includes but not limited to creating strong, sustainable, inclusive communities. HUD also wants these communities to be have affordable homes for all. One of the main goals of HUD is to strengthen the housing market in all states and communities along with boosting the economy while protecting consumers from scammers. While the hard work is being done, HUD would like to created affordable rental properties for consumers are not ready to purchase a home. Another goal would be to utilize their housing platform to help improve quality of life and build inclusive communities free from discrimination. HUD makes sure that all the pricing of the homes is affordable to all people. HUD wants to make sure they create programs that will keep people in their homes and create a better way of life. The Department wants to make sure that is provides good quality housing for all people. This is definitely something that HUD provides with another of housing programs for people of economic backgrounds. Starting with financing options that allow customer to only put $100 down to purchase a single family dwelling, to providing housing choice vouchers homeless veterans who have mental and physical handicaps. The products of HUD solve the number one problem of every person in the world and that is housing. There are currently seventeen programs areas within the HUD and they rand from single/ multi-family housing, public housing which includes section and project housing, HUD provides funding to housing entities to reduce the rent for occupants in certain areas in each US city. Other great housing programs of HUD include Indian housing and elderly housing which HUD provides funding to elderly facilities to offer affordable housing for the elderly who may be on low fixed incomes.

Strategy Clarification

This interview was conducted with one of the Branch Chiefs employed with the Single Family Housing Division named Danielle Lewis. Based on the interview with the manager, she disclosed that the product portfolio were single family properties that have been through the foreclosure process after a borrower defaulted on an FHA loan. Lenders that well FHA loans have an insurance that comes with the mortgage. Once a borrower defaults on a loan, the lender has the option of filing a claim with HUD to re-coup what was loss. Sometimes the bank will keep the property and sell it themselves if it in good condition. Danielle stated the target market for these properties are owner occupants, even though investors can purchase the properties as well. The manager went on to state that because HUD properties are usually sold below the market rate it is usually appealing to the customer because they will have some equity that is present in the home after its purchase. The main needs of the customer that are not met is the amount of money HUD pays for closing cost. Most of the customers do not have a lot of money to pay the closing fees and HUD is only willing to pay three percent of the closing fees. Also, HUD doesn’t complete repairs on the properties, so some customers are lost because they are not able to obtain a loan on HUD properties that need extensive repairs. Based on the interview Danielle believes that HUD has competitive advantage because the agency offers programs that no other agency has such a Good Neighbor Next Door which provides housing at a fifty percent discount to members of the police force, teachers, and EMT. This is just one program that allows everyday working families to purchase an affordable home. HUD also has a larger inventory which allows for more choices for customer.

Cultural Assessment

There are a lot of unwritten rules in HUD. Some of the rules in the agency include item like managers like to involve themselves in the business of the staff members when it comes to the work. For example, staff have to answer request from HUD contractors regarding payments for utilities, HOA, and repairs. Before the staff member can answer the question they have to send their recommendation to their manager to review. This slows down the process for the staff and the contractor. Most of the time managers take their time or are not in the office to read the recommendation. There are times when the items are not completed in time and penalties have to paid by HUD for paying the bill late. Also, there are many times when there is information that is not being shared across the division and this causes major problems with staff and managers. Sometimes managers will only share the important information with certain people and the ball is dropped many times because the information is not shared and the customer suffers for it. For example, a manager might tell a staff member about a new policy regarding earnest money and other staff members handle the same situation in a different way because the information wasn’t given and this opens the door for contractors and customers to sue HUD.

Value Chain Analysis

There are number of programs that are offered at HUD that no other housing agency offers such as Good Neighbor Next Door which offers single family housing properties to members of the police, teachers, EMT, and firefighters. The homes that will be sold to these individuals will be sold for a discount of 50%, this allows HUD to build neighborhoods that are safe ad free from crime. The discount that is offered are for certain homes because HUD wants to build the value of the homes in that area and provide protection for the current and future residence. Another program that is offered by HUD that gives the agency competitive advantage is HUD allows purchaser of single family dwelling an allowance to select a closing of attorney of their choice and HUD will pay for it. This program allows the purchaser to select which closing attorney close the loan they have with HUD. HUD used to have contracts with closing attorney but many of the purchasers had to travel to other states which were far away from the property they were buying. This program gives the purchaser the control to have the funds they need to close on their homes and be able to close in the area where they are buying the home. The specific wants and needs of HUD owner occupants are single family housing dwellings that are free from hazards and health issues. Most of the customer’s request properties that are three to four bedrooms, which around 95 percent of HUD’s inventory meet that criteria. At one point a customers requested HUD buy back the property she purchased because she found out there was a horrible crime that was committed in the property. Based on her beliefs she would not be able to dwell in the home. HUD perform the transaction and the property was brought back with no penalty. The customer purchased another HUD property which she loved. Customers purchase HUD homes over the competitors for a few reason such as price, property condition, and buyer incentives. HUD competitors do not have employees that are hire to keep properties cleaned and free from liens. That is one major advantage for HUD.

SWOT Analysis/ Part Two

Internal Factors
Strengths	Weaknesses
· $100 down financing program which helps people that do not have a lot of money for a down payment. · Good Neighbor Next Door allows customers that are employed as a police officer, teacher, EMT, and fire fighter to reason a home with a 50% discount in certain areas. This allows high crime and foreclosure areas to be revitalized with everyday professionals. · Larger inventory allows customers to purchase homes in many areas because they are limited. · Buyer select closing agents allows purchasers to select their closing attorney and HUD will pay for the closing fee.	· HUD does complete repairs on properties in inventory this allows HUD to loose many customers when they are unable to receive financing due to extensive repairs required to bring property to standard · HUD only pays 3% closing cost which in many cases requires the purchaser to pay the rest. HUD does not negotiate with purchasers on many times loose them to new home builders. · HUD only pays 3% commission which must be split between buyer and selling agent. The industry standard is 6%. This decreases the amount of agents that will show their clients HUD homes.
External Factors
Opportunities	Threats
· Bulks sales is major opportunity that allows HUD to unload properties that have been in inventory for years. It also allows other government and non-profit agencies the opportunity to purchase multiple properties at a decrease rate. · HUD has an opportunity to allow agent the conduct open houses to bring potential clients to purchase HUD homes.	· Competitors such as new home builders and real estate companies offer repairs on homes and brokers bonuses for agents that sell their homes. This allows the agent to make more money with less requirements. · Competitors are allowing customers to sign contracts online and make changes if a mistakes is discovered. HUD doesn’t allow changes and many times this causes HUD to lose customers HUD also doesn’t have technology to perform online signatures.
Summary of Findings
The above findings show HUD has a lot of great things they can offer to customers such as the $100 program and GNND. However, there still is a lot of improvement to be made with the way HUD conducts business. There are too many ways that HUD opens the door to losing clients. When a purchaser walks away from a deal HUD loses money and the holding cost of keeping a property continues to go up. HUD is also behind the technology curve when it comes to e-signatures, many of HUD competitors allow customers to e-sign their contracts which saves time and money. HUD also doesn’t allow customers to change mistakes that have been discovered on contracts, this is a bad practice because most HUD properties are in inventory over six months.

Balanced Strategic Scorecard/ Part Three

Financial

HUD financials can use a lot of help when it comes to holding cost for each property and amount of money that is paid to Field Services Contractors and Asset Managers that aren’t performing according to their contract with the federal government. Daily holding cost range from $30-$60 per property and the longer a property stay in inventory the more money paid for a property that already has caused the agency a lost one the mortgage company has filed and insurance claim after the borrower has defaulted on their loan. Contactors earn around $1million per month, that’s a lot of money to pay for a contractor that is nor performing well. HUD should implement practices that allow employees to replace non-performing contractors.

Customer (External Stakeholder)

The external customers that conduct business with HUD on a daily basis would be real estate agents and home buyers. HUD needs to make sure they implement a practice that allows customers to make changes to their contract if a mistake is discovered. For example, there have been customers that have left one number off their SSN and they provide the agency with their SSN card and the agency will not allow the customer to make the change, but instead cancel the contract and put the property back on the market. Also, agents are often disciplined when properties have issues reported. The issues with this is the agents do not have a contract with the agency and they are only paid once the property closes. The commission that is paid is below industry standards of 6%. HUD pays a fee of 3% to be split between buyer and selling agent.

Learning and Growth

HUD requires staff to take certain trainings each years such as EEO, and IT. Although it has been stated staff can take other training that will improve the work product of the employee the agency really doesn’t have funding available to pay for the training. If funding is available, the employee’s manager will not allow the employee to take it. HUD should also allow cross training within the division, if a staff member works on a different branch the managers do not like the employees to receive training from members not on their team.

Internal Process

HUD is historically known for selling its properties lower than the industry. HUD was under the impression that if they decrease the asking price that would attract potential buyers to make an offer on the property. The problem with that is when potential clients bid on properties they would submit bids that were much lower than the asking price. Also HUD has preset price reductions for each property, this is something that should be removed from the department. Reducing the asking price causes more harm to the department such increase loss and decreased earnings are closing. For the HUD to reach this goal of increasing the asking price for each property, the department would have to use the appraisal price that is given by the certified appraisers that work for the department. The appraisal price is set by reviewing recent sales that are comparable to the subject property. If the department uses the appraisal price and stops the automatic reductions the asking prices will be increased. The department has also decided to perform repairs on properties that have less than $5000 in repairs. This task will also ensure the department is able to sell the property as a higher asking price and reduce the amount of time the property is in inventory.

Conclusion

In conclusion students were asked to conduct an internal environmental scan and organizational assessment for their selected organization. This report was The Department of Housing and Urban Development. During the report students researched various areas such as the mission, vision, and values of their agency, which allowed students to research and share the agencies understanding of the mission and how their mission relates to their business. Other areas that were researched were strategy clarification and cultural assessment. Afterwards, student created SWOT analysis which gave the strengths, weaknesses, opportunities, and threats faced by their selected organization. Lastly, the report ended with a balanced scorecard which allowed students to selected two to three measure for each of the performance measures which are financial, customer, learning and growth, and internal process.

Reference

P260 Portal for Inspectors, Appraisers, and Closing Agents. (n.d.). Retrieved October 09, 2016, from https://www.hudp260.com/Pages/Resources/hudtraining_mm3_portal.aspx

Program offices/U.S. Department of housing and urban development (HUD). Retrieved October 10, 2016, from http://portal.hud.gov/hudportal/HUD?src=/program_offices