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Over my head... Questions need answers.
I am motivated and I am all in. I have been doing significant work and I think I found a deal. It is a wholesale from Riverside County. The asking price is $192,5K and I have a comp that is around $434K. For the investor, I can already say that it will be a sqft addition project. My question is... This is a REO and the listing agent is with HomePath and a Fannie Mae property. The thing that confuses me is all the supplemental steps to make an offer. On listing it says that the only way to submit a offer is to be a first time home buyer, complete a HomePath Ready Education Program (which qualifies you for 3% off closing), and fill out a Real Estate Purchase Addendum. Has anyone every experienced buying this way or is this not a deal to go for? I am already prepared to make a ROI and ARV analysis with a contractor and walk the property, make sure the financials make sense, and submit an offer to (1) the seller and (2) presentation to the buyer. Let me know what you think.
Bill, if it says " First Time Home Buyer" and you are not, I would say don't waste time on it.
But it seems like you're really interested because it seems to be a great deal. Give it a shot. Try to talk to the agent first. That sign might just be a listed requirement.
With that educational program, they want it to be owner occupied.
Good Luck.
Correct, owner occupied, which I have no intentions on doing. I will contact the agent tomorrow and see what is really going on. Thanks @Joe King Jr
I don't know specifically about homepath or Fannie Mae but many times properties are offered to owner occupants first. If they don't sell in a specific time period they are opened to everyone. So keep watching the listing. Unless and until it is offered to non homeowner occupied, you are asking for jail time for breaking the rules.
Within the first 20 days on the market a FNMA(Fannie Mae) is in the First Look period and is only available to owner occupants who intend to occupy the property within 60 days of closing for a period of at least one year. After the 20 days, the property will be made available to investors if no owner occupants offers were acceptable. There is no "work around" of this policy
@Greg H is correct. There is always a 20 day wait with Homepath. From there, investors will be able to bid on the property. From my experience, they want you highest and best offer. You will have alot of competition. Most of these properties go to rehabbers or hedge fund companies, because they can bid higher than a wholesaler. Just lost my last one the other day, 26 bids. Good Luck!
I'm curious about something - you call this a wholesale deal but what you're discussing sounds like a traditional REO purchase with Fannie Mae HomePath with the listing agent doing both sides of the transaction. Am I understanding this correctly?
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#3 All Forums Contributor
- Lender
- Lake Oswego OR Summerlin, NV
@William King if your trying to wholesale this type of property you may want to rethink you plan of attack.. your going to be up against all cash buyers who are going to close.. if its your intention to try to flip this.. I think you will find this to be pretty tough to do .. Unless you have cash on hand in the bank or a very strong prequel letter... your competition from investor will be all cash buyers those will get accepted first.. plus they usually want a fairly sizable non refundable deposit I seem to recall.
wholesaling and flipping is best done with off market private seller properties I think
@Julia Dugger you are understanding this correctly. I've been talking to mentors and they told me the same thing @Jay Hinrichs off market properties are the best for this niche.
I think they're steering you correctly - in addition to the fact that you'll likely have serious competition and can't purchase during the First Look period, HomePath properties also have a deed restriction that limit any sales to after 90 days or less than 120% of sale price.
Originally posted by @Julia Dugger:
I think they're steering you correctly - in addition to the fact that you'll likely have serious competition and can't purchase during the First Look period, HomePath properties also have a deed restriction that limit any sales to after 90 days or less than 120% of sale price.
Hi Julia, can you explain the 120% rule for me? If the sale price is $100K, is resale limited to $120K or $220K? Is that restriction in place for life of ownership?
The sales price or actually the ability to encumber the property would be limited to $120k for 90 days
@JASON PIEBES, Greg is correct -- you cannot sell the home for more than $120K for the first 90 days after closing.
Thank you @Greg H. and @Julia Dugger
Much appreciated!