Getting around Fannie Mae 15 day restrictions?

Question

This may be a moot question but is there any way around the Fannie Mae 15 day first look rules? I'm not talking about doing anything illegal. Just a legal "work around" to get these properties before they get to day 16 and every hedge fund and investor are in an all out bidding war. BTW I am working on behalf of a hedge fund as an agent and my market is going crazy with REO's and Short Sales so Im looking for an "edge" if one even exists. There not flipping these properties rather holding as rentals for yield and long term appreciation. Any advice would be appreciated.

Joel Owens · Answer

You need to go after the off market stuff.

As an investor myself being a broker about every property on the MLS is either a HUD home, Fannie, Freddie that is a good deal. They all have owner occupant periods on them.

Regular bank foreclosures I haven't seen many in years and years.

One thing you could try is to call divorce attorneys ,probate attorneys, and bankruptcy to get an inside track on unlisted properties.

Also direct marketing works great but costs money. If you are low on cash then you will need to dial for dollars.

Phil Z. · Answer

Ask the agent if you can pre-date your contract for the 16th day and if they can submit it as soon as its open to investors.

You will not be able to get your offer accepted in the owner-occupant time frame.

Bryce Y. · Answer

I don't think this is too far-fetched, at least where I am.  I offered $8k cash over list price on a homepath property during the first look period and was outbid...

Like Joel said, I'd look elsewhere.  It seems the MLS is saturated even as an owner occupant.

J Scott · Answer

The only legal way around it is to actually move into the property for a year...

As Joel said, if you're in a market where there are a lot of institutional investors (and you're representing another one), your best bet is off-market deals.  While I've never been a wholesaler, I've spent the better part of the last year finding off-market deals, doing some cleanup and minor repairs, and then marking them up between $10-35K to resell to institutional investors.  If you were doing what I'm doing, your clients could be getting the same deals for significantly less than what they're currently getting from guys like me.

If you're just competing for the MLS inventory, you're likely going to overpay and your clients aren't going to be very happy with their margins long-term (in my opinion).

Joel Owens · Answer

Hi Will,

You might need to look at possibly changing your business model. I have learned over the years and years of being a being a broker that there are many people out there with money searching for all kinds of things.

The question is how hard is it going to be for me to find it and what will be the return on my investment of time??

If I have to spend hundreds and hundreds of hours or more to find one off market 50,000 house for a check of 1,500 then that would be a low use of my time.

If I spend that same time to find a commercial property worth millions and make 60,000 for example then it is worth the time to me to try and find it for a great client. If you have to work to extraordinary means to find a property then the payoff needs to be huge to justify it. I do not look for insane deals either where one property might present itself in 1 years time and there are 15 offers on it. You just can't run an effective business model that way with investors chasing "the score of a lifetime". I work with clients that of course want  the best deal they can get but are reasonable with market expectations. For example if everything transacts for a commercial property in the market at a 9 cap then they are happy to get something 50 to 100  basis points higher that is quality. They are not trying to get a 12 cap to 13 cap etc.

I know in owner occupant periods sometimes you can go ahead and put in offers for when the OOP expires.

You have to find the deals that nobody knows about to get paid really well and that takes deep connections. I get the same thing on commercial real estate but I am dealing with partnerships, investors, and REIT's looking for properties. Same thing but a different space. That's why when I look through coal for a Diamond I want it to be a big that I get a bunch of money for. I do real estate because I am a passionate about it but I thought I would explain my business model.

The hedge funds have deep pockets but are very picky on what they buy. You might want to land regular investors who as long as the yield is there will buy the properties you have to present instead of (property has to have a 2 car garage, 3 bed 2 bath, built after a certain year, etc.) with the funds.

Will B. · Answer

Joel Owens. Yea,   Its pretty much the same here.

Looking for off market opportunities as well but most are junk that I have come across which is not what this group wants.

Will keep searching though.

Just find it hard to believe having "multiple cash offers" on day 5 on some of these properties. Seems like something is going on that I'm not aware of.

Mark Ferguson · Answer

There is a reason they have the first look periods.  So owner occupied buyers can have an opportunity, not to provide one or two investors who find a loophole an advantage over the rest of the investors.  Its a felony with HUD and they can fine buyers 250k with prison time for posing as owner occ when really an investor.

Getting around Fannie Mae 15 day restrictions?

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