There are few better deals in today's real estate market than properties that are currently owned and managed by Fannie Mae. This page is here to help you understand what to expect when attempting to purchase a Fannie Mae owned property.
Tips on Buying Fannie Mae Properties
1. Before Fannie Mae will accept an offer, all buyers must document their ability to purchase. You must have a pre-approval letter if you're obtaining a mortgage, or proof of funds if making a cash purchase.
2. Any licensed real estate agent may assist you with your purchase. Initial offers are submitted on standard purchase agreements. If a contract agreement is reached, Fannie Mae requires buyers to complete a contract package, which includes an addendum, a lead-based paint and mold/mildew disclosure, and the Fannie Mae Indemnification Agreement.
3. Paragraph Three of the Indemnification Agreement states Fannie Mae will refund the entire purchase price of the property, in the event of a property redemption. Fannie Mae makes no offer above the actual purchase price, so buyers obtaining loans in an amount greater than the purchase price should insure that their lender is aware of the limitations of the agreement.
4. Fannie Mae will negotiate with buyers! Generally, Fannie Mae sells their listings between 92 and 100% of the asking price at the time an offer is made. However, this does not mean that Fannie Mae will automatically agree to take 8% off the asking price. All contracts must be negotiated. As a matter of policy, generally, before Fannie Mae agrees to take less than 92% they will reduce the price and market the property again at the lower price. Properties which have aged on the market, or have especially adverse conditions, are subject to be sold at an even more reduced price.
5. What happens when two buyers want the same property? If two or more people are attempting to purchase the same property at the same time, Fannie Mae will no longer negotiate. Each party is required to submit their "highest and best offer" within a specified time period. In this situation, buyers may wish to make offers which exceed the asking price to increase their chances of an accepted offer. Generally, Fannie Mae considers two items: the net proceeds from the sale, and the closing date. In this environment of multiple buyers, Fannie Mae has the sole right to choose which offer is in their best interest and decide to either accept the offer as is, or further negotiate with a potential buyer. If the highest offer falls below Fannie Mae's desired sales price, Fannie Mae is not required to accept any offer, even the highest of multiple offers, and can instead decline all offers and return the property to the market.
6. All Fannie Mae properties are sold as is. Fannie Mae does not make any warranty of any sort beyond the close date. Fannie Mae may make repairs when property preservation issues are present. Fannie Mae does not warrant repair work done while the property was in its possession.
7. Fannie Mae requires that title work be prepared by an agent of their designation. A separate local closing agent is also enlisted to prepare and oversee document signing and recording. Generally, the additional attorney fees are about $500 dollars more than those of other real estate transactions. Again, Fannie Mae will negotiate closing costs, but it is the responsibility of the buyer to know what closing costs will be required for their specific transaction.
8. We pledge to work all offers in a timely manner. Fannie Mae sales reps expect you to negotiate. Usually, offers presented before 3 o'clock will receive a response the same business day. Fannie Mae will negotiate all reasonable offers, but unreasonable offers may be rejected outright. If you are in the market for real estate, we hope you will consider a Fannie Mae REO property to meet your real estate needs. We wish you success in achieving all your real estate goals.