Profile picture for VeronicaLG

Buying Fannie Mae house with extensive repairs needed

Hello. I am trying to purchase a Fannie Mae home. Home is listed at 195K and has been reduced once. Agent told us Fannie Mae estimated 17K in repairs. Our estimate is 45k. Can't even turned utilities on because the wiring has been ripped out, plumbing cut in places and it needs a new well. No A/C, no well equip, etc.There is also a building on the property that is unpermitted.
We have made 2 cash offers that have been rejected. The last at 160K. Both have been rejected. The second offer we asked the agent to send along the list of repairs we estimated.
At this time the agent is trying to get us to bring the offer up to 175K to get them to respond. With the major repairs involved that number is beyond what we are willing to pay. I have heard that a good tactic is to get them to accept an offer and then during the home inspection period go back with the additional repair costs and try to re-negotiate the price. Has anyone done this?

I'm not that sure about the agent we are using. Is it ethical to make an offer on the same property but switch to a different agent? I just have this feeling he isn't really working for me.
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August 12 2013 - Fort Myers
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Answers (8)

Profile picture for gator70
My experience with Fannie Mae is that they think they can get the price they are asking. It can be they have a bad BPO. The only way they budge is when the property goes unsold. Each quarter year they will do price reductions approximately 15-20 days before quarter end. They have reports to management and they want to move out properties.
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December 06 2013
Hi Veronica,

I know it may be a little late for your case, but just in case you're still duelling with Fannie Mae, I would recommend the following:

As others have noted here, Fannie Mae IS just another Seller.  They want to get the most they can for their bottom line.  Anyone would, right?  When I have a Buyer who wants to purchase a home and it is obvious that the home needs some extensive work as you describe, I always recommend that they get 2 or 3 quotes in from independent contractors giving their guestimates of the work required.

I then include pictures, the quotes, etc. and make them Part of the Contract with a little blurb stating that you are making a reasonable offer which is substantiated by the accompanying supporting documentation made part of the offer.  We direct the Seller to review the documentation.

It takes more work, but working together with your real estate professional should take some of the head-ache out of it.  If it's a property you want, sometimes a little elbow grease to set things up properly and creating a nice and neat little package that justifies the offer is worth it. 

As far as your agent is concerned, you may want to speak with him/her and also his/her broker and try to get some kind of solution or plan of action for you to ethically achieve your goals.

Hope that helps at least for the future.

-E.

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December 05 2013
Fannie Mae is like any other seller. It takes time for it to sink in that the property is over priced and needs too much work.  Wait until the price drops again.
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August 12 2013
Profile picture for VeronicaLG
Thank you so much for your responses.

I am a Fannie Broker and would not recommend you raise your offer with the idea of asking for a price reduction after the inspection.
I would agree with you. I had read this and my agent mentioned a similar senario to me.
I think you are better off waiting until the price is reduced and then submitting again.
Thank you. That is what we were thinking would be best.
I would say that you ask for a copy of the repair estimate that the bank has obtained...Is it an actual estimate from a contractor or is it the agent's recommendation?
My agent read me off each line item with the price they associated. I assume it is not from a contractor because he also said that a licensed contractor would give a better estimate. I have gotten contractor estimates and my husband and I are in construction so we are willing to take on such a big project

Is the list price already taking into consideration the need for repairs? It sounds like you are wanting to subtract the cost of repairs from the list price, but it is quite possible the list price already took this into consideration.
Yes. However, thier number is 17k and our is 45K and they have left out some very major items. Like a well, air handler, plumbing and thier estimates are very low.

Has your agent run a CMA on the property to give you an estimate of the market value if the property were in average condition?
He ran me a report and it showed 166k - 211k. The most recent comparable property sold at 168k, was 250sqf smaller but had been remodeled.

I understand what a few of you mean about the agent. Thanks

Any advice on where to go from here? I'm thinking that not many people will want to get into a house that needs so many repairs. I would also think you wouldn't be able to get it financed so only cash offers could get the house. The agent has told us that there are no other offers.

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August 12 2013
I am a Fannie Broker and would not recommend you raise your offer with the idea of asking for a price reduction after the inspection.


I think you are better off waiting until the price is reduced and then submitting again.

I would say that you ask for a copy of the repair estimate that the bank has obtained...Is it an actual estimate from a contractor or is it the agent's recommendation?
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August 12 2013
Fannie Mae has a history of not accepting offers that are lower than 90% of asking price.  In fact, they probably may not even accept 90% in today's market.  $175K is just about 90% of $195K, so this is where the agent is going.  But even if you offered $175K they will probably counter higher.

It is up to you to decide how much the home is worth to you. Personally, it sounds like a money pit to me.

It does not matter who the agent is, FM only looks at numbers.  They do not care what you you think it will cost to repair the house.  It is not like negotiating with a rational person. They only look at the net dollars to them.
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August 12 2013
Profile picture for wetdawgs
Is the list  price already taking into consideration the need for repairs?   It sounds like you are wanting to subtract the cost of repairs from the list price, but it is quite possible the list price already took this into consideration.

Has your agent run a CMA on the property to give you an estimate of the market value if the property were in average condition?

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August 12 2013
The agent is not going to do anything more than present your offer and anything else you are asking for. We don't go see the bank and we can't usually talk with anyone, you have to submit things to them. Another agent is not going to have any more magic up their sleeve, so stick with your agent. You are dealing with a bank, banks are difficult to negotiate with because they don't care, it's not their house or money. My guess is that if you come back after you agree on a price and try to get it lowered you are going to tell the bank things they already know. I have seen banks ignore offers they feel are too low for months and months waiting for the person that is not trying to steal it (in their opinion). A sellers estimate and a buyers always is different, and I assume your is high because you want it to be to get the price down - the bank knows this too. They have done this before.
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August 12 2013
 
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