Fannie Mae Foreclosure
Finally got my loan approval for a construction/rehab loan, had a property in mind, made a bid. This property had a structural issue on one corner. I had a structural engineer out to look at the property. He told me that it was fixable, so I proceeded to write an offer. The house has been on the market since July. The price has been dropped from $112,900 to $104,900. I offered $90,000 -- it was countered at $99,000. I countered with $92,000. It was countered again at $97,000. I backed off, because there is a limit on my loan and the money allocated for repairs. I did a tentative estimate of $25-30,000 to make repairs, change a bathroom, add a wall, replace the garage doors, clean and paint.
Question: this house had only one other offer since July. I was told many people have looked at it, but all but the one and myself walked away -- they're not investors. The first bidder made his offer in August. They turned him down too. Winter is coming. Repairs need to be made. The brick is actually separating on that bad corner due to bad drainage. It's getting cold at night, so critters are creeping in. I found the skin of a 5 foot snake hanging in the garage. Why, oh why, would fannie mae not want to get rid of this property? I was all set to go, had a contractor and everything lined up. I was fuming. I'm ok now, but that house stood to make me a little pocket change. It sits on 3 acres in a community where homes are selling from $175,000 to $250,000. <grrrr>[ Edited by makingaliving on Date 10/08/2003 ]
I don't know what they are thinking. I am in a process of buying a fannie mae foreclosure too. It was originally listed for 104k, and six months later, they dropped it to 77.5k. Now eight months passed, they are taking my offer of 62k. I initially offered 60K, but I was lied to by a real estate agent who has this fannie mae property. He told me that there were multiple offeres, so I had to give him the highest offer that I could live with right then. Later, I figured out that there were no other offer other than mine. They just did not want to go through counter offers back and forth. I was mad, but I feel like I am still getting a good deal. You might want to keep an eye on the property, if it doesn't go in a couple of months, they may reconsider your offer. I really think they should take your offer and run with it .
smileyface,
Do you still use that realtor?
Hi makingaliving
So what is holding you back, the loan or their asking price?
Even at FMV and some rehab work it looks like nice profit.
Mike
[addsig]
If you are saying that comps support a sales price of 175-250K, then why are you upset over 7K? Even if your rehab costs exceed 25% of your estimate, you are still in a great position. Am I totally off base here, or do you see my point? Good Luck.
Matt
Matt
To answer your question, I don't want to, but I may have to later. The angent who lied is a listing agent who handles a lot of fannie mae forclosures, so I may have to deal with him later again. [ Edited by SmileyFace on Date 10/09/2003 ]
Quote:
On 2003-10-09 00:05, Sash wrote:
So what is holding you back, the loan or their asking price?
Actually both. My loan is limited to $100,000 for both the house and repairs, even though that is less than what I estimate the ARV to be. Any overage would be attached to my primary residence as a second. The max the lender would put on a 2nd is $25,000, so paying anymore for the house would have seriously reduced my working capital. My plan was to also use some of that repair money for the interest payments I would have to make. Ordinarily, I would probably have tried to work with their final offer, but I was also asking for closing costs. (sorry, left that out). So I wanted the property for my last offer of $92,000 plus closing costs. Reason: the loan; cash flow situation. I really don't want a 2nd on my house, because right now, I am living on borrowed money. No real income coming in. I didn't want to put myself out there too far and end up losing all the way around.
This is not my first rehab attempt. My ex and I use to do this for a living, but back then, we had private money to work with, and creative contracts. And we mostly bought houses that were selling so cheap, we could pay cash for them. Not so anymore. The shacks around here have escalated in price. (Although this house was no shack).
I may do as suggested and wait it out, although I hope the house doesn't suffer much damage due to the cold. The realtor said they would be leaving the heat on, because they noticed that houses that were winterized still ended up with problems. I'm also looking at other properties. This one was just so good, had so much potential. I can't help but wonder if it would do any good to try to find out who the head honcho is and talk to him. I was told he is not flexible.
By the way, for those who are curious about my financing w/o income. It was amazingly easy. I honestly was surprised. But with no real income (I'm a struggling new realtor), and a solid credit score, I was able to pull out money on my house in a refinance and secure the rehab loan --- no doc. Just a month ago, I was wondering how I was going to make my October mortgage payment, now here I am with access to all this cash -- and debt. Amazing.
Let's face it...there are lazy people out there...lucky for you there is recourse to the agent. My suggestion is to write a letter to the local board of realtors AFTER you get this deal done. Document the dates and conversations as best to your recollection and then send it certified to the board. The board is there for a reason...to adhere to policies, guidelines and ethics. They WILL handle this with the agent. A cc letter to Fannie Mae might be in order (depending on your level of comfort) to let them know that they may be missing opportunities to get houses out of their inventory due to a lack of willingness on the agents behalf to present the offers. Then...you guessed it get an agent that wants to make some money and execute your requests (within reason) as an investor.
Ok...I guess I need to sharpen my negotiating skills or something. So I lost the bid on the first property that I offered $92,000. Since then, the asking price has dropped to $99,000. The agent keeps calling me asking me if I might consider "offering just a little more." He's called me twice in the past week. I told him no both times. I'm beginning to think that he might not have submitted my original bid, or gambled that I would crank it up a bit. Although this house is in an area where home prices are pretty good, there are still some considerations. The community is mostly "rural" with houses sitting on anywhere from 2 -20 acres. The house I wanted is much older (1960) and on a hill, though not overly steep. It sits on 3.5 acres. Anyway, spilt milk.
So I go after another one in an area with promise. There was a house, which for all intensive purposes, is a shack, selling for $49,000. The owner paid $28,000 back in 1998 and did NOTHING to the property. No central H/A, lousey bathroom and kitchen, two bedrooms, a sunroom that needs to be removed, and just poor maintenance all the way around. So I offerd $38,000. The only think that's sold in this area went for $27,000 back in the spring. (trust that I believe this area is on a comeback...) He turned it down, insisting on full price, even though this property has been for sale twice since 2002. The first time it sat on the market for 96 days, this time it's been for sale for 157 days. I think what's happening is that there is so much rehabbing going on that even owners of shacks are hoping to cash in. This house is on septic, needs serious updating and some repairs. Oh well....gotta keep trying.
These deals boggle my ****Must Reach Senior Investor status before posting URL's***he first sounded like it had potential. I don't know what your rehab time would be.
The second sounds like a candidate for a headache ball..
Maybe you defer rehabbing and try some of the other buying techniques.
Many year ago I use to just rehab. Now, I wouldn't take one at any price. There's more than one way to make a good living in real estate.
To be honest with you, the 2nd deal you are dealing with doesn't sound so good. The neiborhood sounds very lousy. The houses are not moving and not appreciating. You might want to consider some place else.
Yeah, you're right about moving on. But really, this is one of those neighborhoods that's on the "verge." Correction: A colleague bought a burn out around the corner and rebuilt it, adding a 2nd story. It was beautiful. He bought the land and shell for $5000, put $65,000 into it, and sold it for $135,000. (sorry, I forget these little details) The $27,000 sale was a repo by a mortgage company. I think I'll go look at that one.
Rehabbing is all I really know. Well, I don't do the work, persay, but I'm a darn good supervisor. I still have to learn how to do the other parts of real estate. So much information, so little time. [ Edited by makingaliving on Date 10/19/2003 ]