Fannie, Freddie, HUD -- is 85% true?

[Account Closed]

I heard someone mention the other day that listing agents for Fannie, Freddie, and HUD properties will not be very helpful with offers that are less than 85% of the list price because it may loose them their contracts. Is this a pretty definite number?

I know, I know... nothing is DEFINITE in this business. I just want to know if I am wasting my time on low ball offers on properties being negotiated by these entities.

[Carla Reid]

Most Asset Management companies have an agent rating system in place. With these companies it is true that listing agents are graded and one of the items they are graded on is list price compared to sales price.

For instance, with each of the companies I've worked with, they want to see the sales price 85-90% of list price at a minimum. If agents consistently sell the assets below the 85%, they are in danger of losing those accounts.

As a general rule of thumb, you won't see too many offers being accepted more than 5% below list price for the first 45 days.

I'm NOT saying it doesn't happen, but from my personal experience with AM's, this was the procedure they were required to follow from the "powers that be" within their organization.

Personally, I submit offers for clients all the time that are at 50% of list price. I don't let this deter my clients (or myself) because it is a numbers game, and you just never know when you'll be able to get an offer pushed through and accepted.

Like Peter mentioned, only offer what makes sense to you and your investment strategy. Don't let the 85% influence your numbers. If you're offer is not accepted, just wait a few weeks and try it again. The longer the DOM, the more motivated the AM becomes to get the asset off the books because they are graded on their performance as well.

Just FYI, the AM's receive monthly bonuses based on their previous months numbers. So, if you want to lowball, a good time to do this is the 2nd week of the month. Offer a 2 week close (if possible), and you may just see your offer accepted. :mrgreen: