Twenty Tips for Making Offers on Freddie Mac REO Properties

52 Replies

I wanted to share a great post with everyone from the BiggerPockets blog by Winston Westbrook, which details how to increase the odds your Freddie Mac / Home Steps REO offers will be accepted. Check it out and be sure to leave your thoughts below the article or here.

Top 20 Tips for Making Offers on Freddie Mac/Home Steps REO Properties

Good info.

I just got a Freddie Mac offer accepted.

Heres how it went down;

They would not look at any offers for the first 7 days. After 7 days all offers were submitted. They did not go to highest and best.... they just took the best offer right off the bat.

Are there any notable differences in approach that should be taken with Fannie or HUD (FHA)? There are FAR more listings from these agencies in our area than through Freddie.

Thanks for any assistance.

Good article. Just got a freddie property under contract. They are doing $100 per diem now not $50, and are actually making me go 30 days to close - I wanted to close quickly (14 days). Always something new dealing with these guys.

Pretty good post. I am not sure you need the cover letter though. They dont care why you want to buy the house or if you can sell yourself. Stick to making the offer as clean as possible.

Some of this is just plain wrong. I'll take it by the number.

2) Yes this is sort of true. The way you get a bank to pay for your closing cost is in a reduction of purchase price. If that is what you want then just put in a lower offer.

7) Again this will depend on how long the home has been on the market. If you submit an offer and the giving 72 hours is just fine and you are sure to at the very least get a counter offer.

8) This depends on how long the property has been sitting on the market. If you see a home that has been sitting for 45+ days then you can bet that they are not sitting on offers waiting for a higher one. They don't have any offers. I would NEVER recommend anyone much less an investor to start their offer off at or even near list price. If your offer is fair, say 90% of list price then at the very least you will be countered. At some point you may even receive a highest & best document from the listings agent, but I would be willing to bet that most of the time this will be a bluff. Now, this isn't the case if the home has been on the market for less than 30 days or so.

These are pretty all still great ideas when putting in offers on Freddie or ANY other REO properties.

I personally disagree with #8 -- I don't think you need to put in your best offer off the bat -- but I know that some other very successful investors like this tactic.

Does anyone know of a way to get lower escrow deposits on Homepath properties? They require 10% in Miami... so it's if your wholesaling a 80k dollar house, it really adds up. There must be some way around it, right?

FNMA is generally going to require 10% EM for all investor offers...I will normally offer $5K on any offer, which is often less than 10%, and I don't think they've ever had an issue with it (though I don't think they'd accept $1000 or anything close to that).

In fact, I put a FNMA under contract two weeks ago where the purchase price was $46,000, I offered $10K in EM, and the bank made me pay $4600 (10%) instead! They wouldn't take my extra EM!!! :D

J - On the house you're coming to check out on Saturday (went under contract as of May 27th) FNMA accepted $1k EMD on a $42k purchase price (not including 2% in closing costs)

Originally posted by Victor Alfonso:
J - On the house you're coming to check out on Saturday (went under contract as of May 27th) FNMA accepted $1k EMD on a $42k purchase price (not including 2% in closing costs)

I certainly stand corrected!

Thanks for the info, Victor...I just assumed that they'd want at least close to 10%, but I guess that's what I get for assuming... :oops:

Originally posted by Victor Alfonso:
J - On the house you're coming to check out on Saturday (went under contract as of May 27th) FNMA accepted $1k EMD on a $42k purchase price (not including 2% in closing costs)

Was that for an ALL CASH purchase, or a financed offer?

Financed - 20% down. I've recently purchased 2 Freddie Mac properties with financing as well. Why use cash when debt can be had at less than 5%? :) Sorry that slipped, let's not go there again..

IMO, the GSEs aren't as afraid of financing as some believe, especially if you can show POF to be able to purchase outright.

AH, it's financed - that explains the difference in EMD. The ALL CASH investor offers are the ones where they want 10% down. After all, if you have enough cash to buy it 100% cash, you can certainly demonstrate that by putting some of that cash down - at least that's the thinking the bank's have.

Has anyone heard of having a lower Earnest money deposit with a hard money offer, so you don't have to put down huge deposits. I heard this in a training when I began a few years ago. I asked the agent, and she would not agree. :D

Technically, a hard money offer is a financed offer - and so it should be written as a financed offer. Then you can ask whether they are requiring 10% EMD from all other financed offers or not ...

Just last night I was speaking with a HML who basically said that their POF was more of a letter of intent, along the lines of a pre-approval letter; there are still underwriting considerations to be satisfied with HML just like with a bank loan.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here