Fannie Mae Auction Property Flip Restriction
I just got an offer accepted by Fannie Mae. We bought the property @ REDC. The purchase price is 84k, ARV is 140k. There is a clause in the contract that says I cannot resale for more than 100k within the first 90 days of obtaining title. The situation is that they don't say what the penalty is if I were to do sell it within the first 90 days.
When buying properties as REOs from the MLS, theres a FM addendum stating that if you sell within the first 90 days, there's a $5,000 penalty. I would be more than happy to pay the 5k but the contract I currently have with the REDC property doesn't say anything about it.
Any of you guys ran into this yet? How'd you get around it? Would love some feedback. Will also keep you guys posted as to what happens.
Most Popular Reply
This is the first time I've heard of a penalty for not following the terms of the deed restriction. 90 days is a standard deed restiction for FNMA properties, although in rare occurences the restriction never makes it to the deed or paperwork (search for FNMA deed restrictions on the forum).
Since it is a deed restriction on FNMA properties it will be very difficult if not impossible to sell the home to a retail buyer due to the fact that themselves and/or their lender will require title insurance. Because of the deed restriction you probably won't be able to find a title company (or closing attorney) depending on your state that will provide title insurance for your buyer under the 90 days.
Is the 90 days really going to affect you at this point? How much time to repair the property, then how much time on the market, then how much time to close after an offer? 90 days is a short time frame given market conditions and the time of year.