Buying a Fannie Mae HomePath Property

The reo process begins when the buyer deems that he or she has found a HomePath REO home which is a right match for their occupancy or investment needs.

Even though every market is different, it is not uncommon for Fannie Mae REO homes to receive multiple offers before their deadline. A buyer needs to act in a prompt manner to initiate the purchase offer to the seller (FNMA). A real estate agent acting on behalf of the buyer should be able to prepare the right documentation to submit an offer. A number of factors related to the HomePath property and local market need to considered and factored to determine the suitable offer amount.

The selling agent acting on behalf of Fannie Mae REO department reviews the offer documentation before forwarding the same. If the offer is incomplete for lacking in some needed document or provision, there is very little chance of Fannie Mae reviewing it. Due to this special attention needs to be paid by both the buyer’s agent and the buyer when preparing the offer for a HomePath reo home. As an offer is legally binding, a buyer should consult with the reo listing agent, broker or attorney to review all the documents carefully, before proceeding to submit them.

Determining the Condition of a HomePath REO property owned by Fannie Mae

Fannie Mae does reveal any hazards they are aware of on the properties they hold in REO inventory. This information is shown on the property listing itself. The buyer can use this info for initial assessment only. They should hire a home inspector to thoroughly check the property to determine any other hazards and repairs needed. Fannie Mae allows a period of 10 days to the buyer of a Homepath property to inspect the property after signing of a contact. Any new issues that show up after a inspection should be carefully reviewed and communicated with the selling agent. These new findings can be used to lower the offer price or renegotiate other terms.

Fannie Mae doesn’t restrict or compel the buyers of its repossessed Homepath homes to use a title, escrow or settlement company of their designation. The buyer can choose any company to handle the escrow, title and closing/settlement aspects of their reo purchase.

Fixing up of Fannie Mae REO homes

All Fannie Mae Homepath properties are sold in “as is” condition. Fannie Mae may choose to make repairs to their properties to increase their value and marketability. A buyer of a REO home must be prepared to make repairs, if needed. Some mortgage lenders may not finance properties that are in need of work and fix-up. Such lenders may also ask the buyer to get the repairs done ahead of closing, or may require additional amount in escrow after the closing.

The window to renegotiate a contract with Fannie Mae based on the additional repairs closes right after settlement. Even if a REO home has new paint, roof or carpet doesn’t mean that everything is in working condition. Only a comprehensive home inspection report can discern such worries. Even when a certain amount of work is done on the listed reo property, Fannie Mae doesn’t make any warranties regarding such finished work.

Multiple Offers on a HomePath Home Listing

Depending on the desirability of a REO property and the general real estate market conditions, multiple offers can be expected in Fannie Mae reo homes. When an investor or buyer senses that competing offers may be made on a property they wish to buy, it’s advisable for them to submit their most compelling and best offer the first time itself. If Fannie Mae deems an REO offer to meet their expectations, they may accept the offer right away; but in other cases where they don’t agree to the offered terms, Fannie Mae REO division will propose preferred terms through a counteroffer. Moreover, investors should note that FNMA is under no obligation to agree to any of the offers made on its home listings.

In situations where multiple offers were made on a Fannie Mae REO property, the agency’s department may ask all the parties that made an offer to submit their best and highest offer before a certain date and time. Depending on the appeal of the offer made to them, FNMA may choose to accept or reject the binding offers made on FNMA Homepath properties. Before proceeding to reject an offer, Fannie Mae generally offers a counter-offer with terms acceptable to them.

In negotiations for an REO, an investor or buyer should be patient as rounds of offer – counter-offer between them and the seller. Adjustments and changes occur frequently and should be expected regarding sales price, earnest money deposit, repairs, closing fees and dates on purchase offers made to Fannie Mae REO department. It’s not unusual for FNMA to give offer acceptance just verbally. This protects both the buyers and Fannie Mae in case a third party challenges the transaction.

Owner Occcupant Buyers

When a home is purchased by a buyer for occupancy as a primary residence, they are considered to be owner-occupants. Fannie Mae offers owner-occupant buyers of its REO homes special consideration. The “First Look” provision excludes any buyers other than primary residency buyers from submitting offers on Fannie Mae REO listings. Some public entities and designates are the only others allowed to make an offer during the “First Look” period. Investors can still make offers during this period, but they won’t be given due consideration till the completion of the initial 15 days reserved for owner-occupants.