Fannie Mae, Negotiating the GREAT Deal
How many agents and buyers have found that when offering on a Fannie Mae owned property, the listing agents issue a multiple offer disclosure? Buyers are hoping to gobble up a deal somewhere, and then end up having to offer above list price, even as the agents who list these properties are advertising that the seller (Fannie Mae) will pay up to 3.5% of the purchase price in closing costs. It’s probably a little tough to share the fact that buyers cannot simply steal a property from the wounded Fannie Mae company. However, what ends up happening is that multiple offers are made, and the buyer becomes aware that they must offer at least what the home is listed for, if they truly want to own it!
Buyers who read this, I realize that you want a screaming deal. The reality is that Fannie Mae acquires the property via foreclosure. They typically make renovations and appraise the properties to become familiar with the value of their asset. It appears that they just keep getting bailed out over and over again, so they are holding firm to their prices. Plus, they are meticulous when it comes time to sell their assets. They have a very well honed process to letting them go.
Trust your agents. They are experiencing the multiple offer disclosure on every property and are working to get you that great deal. After all, the prices at which these homes are selling are actually less than what it would take to build it from scratch. How do you know? Appraisal values are determined utilizing two methods, the "sales approach" or the "cost approach".
When you are looking at your appraisal you may notice that the cost approach is greater, or is not even listed (it may not even be of importance to the lender since it is drastically higher). The sales approach is the lesser of the two values, and due to market conditions will be more widely used if you need a loan for the home that you are purchasing.
If it makes you wonder, how could they sell a home at less than the cost it would take to rebuild? Then ask yourself...isn’t that a deal? In that case, take it!
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