I'm looking for some insight on how to structure an offer on a Fannie Mae REO I'm interested in, especially given some discrepancies in how the property is being represented.

Key facts:

• Current listing: Advertised as a 3 bed / 1 bath at 1,850 sf.

• Issue: That square footage appears to include a partially finished basement, including a “room” with no proper egress, so it should not be counted as a legal bedroom or finished living area.

• Prior listing (2021): Previously listed as a 3/1 at 1,572 sf.

• Fannie/FNMA record: Federal National Mortgage Association currently has it as a 2/1 at 1,368 sf, which is much closer to reality based on what I’ve seen.

• Pricing history:

  • Sold 7/14/2021 for $450,000.

  • Trustee’s Deed consideration amount: $347,000 dated 10/18/2024.

  • REO list price started at $489,900, then dropped around 2/16/2026 to $484,900.

• First Look: First Look period expired on 2/20/2026 at 21:00, so investors can now submit offers.

My main concerns:

1. The current list price seems to be based on an inflated square footage (counting the basement as living space) and as if it’s a 3/1, when in reality it’s functionally a 2/1 with a partially finished basement.

2. Comps in the area should really be adjusted to the ~1,368 sf, 2/1 configuration, not 1,850 sf, 3/1.

3. Fannie paid effectively $347K (per the Trustee’s Deed), but is trying to list it close to or above what it sold for in 2021, when it was arguably misrepresented then too.

What I’m thinking:

• Have my agent pull comps based on 2/1 and ~1,368 sf only, ignoring the basement as finished living area, and value the property that way.

• Back into my maximum offer using:

  • ARV for a 2/1 at ~1,368 sf.

  • Less repairs/updates needed.

  • Less my desired profit and holding costs.

• Use the misrepresentation of square footage and non‑egress “bedroom” as leverage, both in the initial offer and during any inspection/renegotiation.

Questions for the community:

1. For those who have bought Fannie Mae REOs recently, how aggressive can I realistically be on price once First Look has expired? Is there a typical % range below list that Fannie will even engage with?

2. Would you anchor your offer off:

   • The 2021 sale price of $450K,

   • The Trustee’s Deed amount of $347K, or

   • Purely current 2/1 comps at ~1,368 sf (ignoring any “Fannie Mae needs to get X out of it” thinking)?

3. How much weight do asset managers actually give to things like:

   • Misstated GLA (1,850 vs ~1,368),

   • Non‑conforming basement room with no egress,

   • Potential appraisal issues if they accept an offer near list?

4. Strategy‑wise, is it better to:

   • Come in with a strong but defensible offer right away (with a brief explanation and comp packet showing why the value should be based on 2/1, 1,368 sf), or

   • Start lower and expect them to counter, knowing they often move slowly and are less “emotional” than a typical seller?

5. Any specific tips for writing offers on Fannie REOs (earnest money norms, proof of funds / pre‑approval expectations, language you like to include, etc.)?

Goal/plan:

I’m not trying to steal the property for pennies, but I also don’t want to pay a 3/1, 1,850 sf price for what is functionally a 2/1, 1,368 sf with a semi‑finished basement. Ideally I’d like to structure an offer that:

• Reflects true livable square footage and bedroom count.

• Leaves room for repairs and a reasonable margin. Will be adding an Adu to the property

• Still looks clean and serious enough that Fannie’s asset manager will consider it instead of just waiting for a retail buyer who doesn’t dig into the details.

Any feedback on offer price strategy, how you’d present the misrepresented square footage, and how Fannie typically responds in situations like this would be greatly appreciated.

Thank you