Any tips for getting an offer accepted on REO in a "hot" market?

Question

I've done the math and ready to submit my offer on a SFR in a very "hot" area (Greater Seattle area).

This is a FNMA owned property. WA State. It's only been on the market for a day. Based on past sales I don't believe this property will be on the market for long. This is a very different scenario from my last REO, which sat on the market, reduced, reduced, then I got it...

Average discount below asking price for FNMA for this market in 2015-2016 was around 7.5%

my first offer will be about 95% of the asking price. My max will be 97%

Typically in this area the more affordable distressed REO properties end up purchased by homeowners or small fix/flip investors. I'm sure this property will be on the radar for a lot of these types of people in the area. Many of the affordable properties on the MLS in this area do get multiple offers, some of these sell for above the list price. There aren't really that many REO's and haven't been very many on the market for about 2 years. In the last year I've been outbid on about 2-3 similar MLS properties (1 bank owned and 2 private seller) some where I put in an offer and the agent came back and asked to submit my "highest and best"...

This particular property is a small fixer requiring 10k-20k repairs in area where most homes sell for 3x as much, and it is currently the cheapest property on the market in the area. Not a lot of recent comps, but some in the same price range all which sold within 30 days. It's also a nice building lot so some investors might tear down and build a new home. It's in a nice neighborhood, desirable location. Therefore it is also very attractive to homeowners. Some who are cash buyers also.

I know the advice I will get will be along the lines of "submit your best offer" ....."all cash / quick close"..."make sure to submit all the information correctly" and "no contingencies"

HOWEVER if you invest in a similar type of market / scenario and have had luck getting YOUR offers accepted ...any other details or insight you can add would be VERY greatly appreciated.

Thank you

Julia Dugger · Answer

Well, for context, hot markets still get multiple over-list offers so this discussion might be irrelevant -- I know you don't really want to hear it but just bid whatever it's worth to you but I recommend at list and they'll come back to do a multiple offer round if there are others bidding. I'm pretty certain it's 100% of value required for HECMs.

Julia Dugger · Answer

sounds like this property is probably a HECM or former reverse mortgage which falls under different rules then the typical homepath property - HUD will not allow it to be sold for less than 100% of value for the first 180 days it is listed. So, I suggest bidding full price.

Patrick Britton · Answer

@Greg P. where is your broker in all this? He or she should be able to give you the skinny on that property in minutes.

Mindy Jensen · Answer

@Greg P.,

My experience for getting a FNMA property in a hot area is to owner-occupy it for the first year. FNAM wants to put owners into homes, so if you can live there for a year, you may get the property over another investor.

Please note: Saying you are going to live there, but not actually planning on living there is mortgage fraud, which is a felony.

Wayne Brooks · Answer

@Julia Dugger If a HECM, isn't the same as during a short sale process.....no less than 95% of an FHA appraisal, which normally would be list price?

Greg P. · Answer

Hello, My apologies for not explaining better,

The property is not on the homepath website, but on the open MLS listed by a local agent. I may have incorrectly used the term FNMA, however, the FNMA is the last bank visible on the chain of title. (preliminary title report checked). My agent has not said anything about homepath or FNMA, I will check for clarification monday to be sure.

Thank you

Scott Schultz · Answer

is it in the first look period only available to owner occupants? they run different cycles depending on condition and financeability they may not even open your offer for a set time period, generally if its open to all buyers, they collect offers for 5-10 days, the Homepath website will tell you what you need to know.

Any tips for getting an offer accepted on REO in a "hot" market?

Any tips for getting an offer accepted on REO in a "hot" market?

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