I am trying to purchase my second home that is a single family REO through Fannie Mae. I offered their asking price and they accepted so we are in an active contract. I am not a realtor and have limited experience so I'm trying to learn as I go through experience and reading the works of RE "Pro's." We submitted the offer of 44,900 for a 2/2 1400 sf home with a "contingent on inspection" and when there was a possible foundation issue found we submitted the cancellation notice. They informed us that we were past the inspection period becuase fannie mae starts the countdown when the "verbal" agreement is made, not when the final contract signatures are sent. They sent their own cancellation notice saying they will allow us to cancel if they can keep the $2000 deposit. We did not sign that cancellation either so the only contract with buyer and seller signatures is the active contract. I said if they will not allow me to cancel without losing the deposit I would purchase the house (had a contractor look at the cracks and reassure us) but they said they "changed their minds" and were not selling it. As of right now they have not refunded the deposit, will not allow me to move forward, and have placed the home back on the market without any disclosures of inspection findings or changing the listing. Please help...do I need an attourney? Nobody, including fannie mae reps, have thus far told me any steps I can do. I did call fannie mae and they sent me to "tier 2" but they haven't called back yet.
Thanks so much everybody.
I think you should have done your inspection before you made an offer. Fannie Mae can re-list it without disclosures because they will not take a buyers word that something is wrong.
I was told by my agent that in FL you can't just go and do inspections on properties that you aren't under contract on. He said we can just peruse MLS and show up with inspectors on houses. Like I said I'm not a real estate agent so I can't speak on the truth of this, yet. He also said that the real estate code of ethics states that inspection findings that affect the value of the home must be updated on the MLS. Again, I am just relaying what I've been told.
I appreciate your reply,
I am a newbie to the REO market, although I have done several fix and flips and buy and holds on the retail side. It does sound to me as though you may need to speak to a RE attorney. I am not familiar with Fannie Mae REO purchases, although the reason I found this post was that I am considering placing an offer on one and I was looking for information. It seems to me that you have an active contract with Fannie Mae, and may have recourse if they fail to execute. However, it does appear that they operate under a different set of rules.
It is my understanding as well that you must be under contract in FL to bring in an inspector, besides which, it could be very expensive to have an inspection performed on every property you are merely considering making an offer on. That is why there is an inspection period in the contract.
Keep us posted as to how things go.
This happened once to me before. Here is what happened:
House was in SF area, ca.
Offer:around 400 k
With inspection contingency. They ask to sign an addendum, w strict terms favoring seller. The inspection contingency automatically expires after a certain period, which is very different from typical CA practice. The countdown is from full execution of the contract, however, not from verbal agreement.
The house has a lot of code violations. We had to meet w city number of times to figure out what happened to this house. It is in south San Francisco, the code officer told me that this house has the thickest binder in city history.
It turned out that an old garage was demoed by the Fannie Mae upon city demand. Now, the city wants a new garage built meeting current setbacks, which will create a nightmare.
We decide to cancel and the listing agent threatened that the government has lawyers who loves fighting. They will keep the EMD.
However, in the Fannie Mae addendum, there was a paragraph, drafted by their own lawyer, which states that either party may cancel the contract at any time if there is code violation blabla.
I called the listing agent and ask him to check the addendum himself with Fannie Mae lawyers. I implied that his License might be in jeopardy. I believe that the listing agent is the one that has the real motivation to keep the deposit. In a week or so, without any explanation, they signed the release.
Check your addendum carefully. Find a valid reason for the cancellation. Did they disclose everything?
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