Fannie Mae Won't let me Flip for 90 Days

[Tony Salazar]

Here’s the deal.
I just got my offer accepted at 132,000 on a REO that the seller is Fannie Mae. Inside the Purchase Addendum it states that I can not sell the property for more then 162,000 within 3 months of closing. This property is not livable and needs many repairs. My projection after rehab was to sell for 195,000. I don’t want the seller to dictate after I own a property, on when I can sell or for how much, especially since it is a cash offer. I sometimes can rehab and close escrow in less then 90 days.
Has anyone been able to counter and remove this? The strange thing is I had this property locked up and accepted on a different occasion about 60 days ago and the contract didn’t have those terms in there.
So moving forward will this be the norm for Fannie Mae? I lost another accepted Reo offer that had this in it, and they wouldn’t remove it. If you notice on REO’s they are making it more difficult for investors to buy, by not allowing investors to write up offers until property has been “active†on MLS for X amount of days, and basically giving the first right to purchase to owner occupants. In addition there are closing cost and real estate commission incentives to owner occupant buyers and their agent, but not to investors. This transaction had a 1500.00 real estate bonus for the buyer’s agent but since it is non-owner the 1500.00 bonus won’t be given.
Any input on this would much be appreciated.

[J Scott]

Unless my attorney is off-the-mark and unless my interpretation of relatively simple contract language is skewed, I think there is some misinformation in this thread.

1. Bill and Will - why do you say that the deed restriction is unenforceable and/or illegal? According to my attorney, you can enforce any contract restrictions by tying them to the deed; if the buyer chooses not to purchase under the conditions set forth in the contract (and ultimately the deed), so be it, but I've never heard anywhere that the seller is limited to the restrictions that go on the deed. Can either of you please provide some support for this claim?

2. Bill - Why do you say that you can sell for more if you show the cost of materials and improvements? Again, I've talked to a couple attorneys about this, and I've never heard a single one agree with that point. The deed restriction in the FNMA addendum is very specific, and conflicts with your assertion. Again, can you provide some support for your assertion?

3. Will - You say that you can't put the house under contract until day 91. Again, this is in conflict with the deed restriction that has been part of the FNMA addenda that I've seen. It's also in conflict my experience -- I've put several properties that have this deed restriction under contract prior to day 91, and never had any issue. In fact, it was the same closing attorney for the buys and sells, so if there was an issue, I imagine he would have mentioned it. Do you have anything that supports this claim?

For those reading this thread, I would suggest doing your own due diligence.

To help out, attached to this post is an actual page of the FNMA addendum (this is from a contract I'm closing on this afternoon, so I know it's recent) with the deed restriction (see #14).

The wording is very clear about the resale price (this price is 20% above the $31,500 I'm paying for it), and there isn't any ambiguity about when a contract can be signed or whether rehab costs can be rolled in.

Btw, note that the asset manager forgot to check the line that makes this part of the agreement, so this is actually not going to be enforced for this contract.