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: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.Comps in the area should really be adjusted to the ~1,368 sf, 2/1 configuration, not 1,850 sf, 3/1.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:For those who have bought Fannie Mae REOs recently, how aggressive can I realistically be on price once First Look has expired?

Needs more hands-on management.Detroit proper — lots of volume, thin margins* 6 deals this week, but average CF only +$97/mo at average price of $107K* The 4.5% average CoC is the lowest of any submarket.

No exposed wires, solid railings, working plumbing, proper outlets, smoke and carbon monoxide detectors, reliable heat.

At this level, the conversation moves from simply qualifying for a loan to structuring the capital stack properly.

Why pay a premium if they aren't holding their weight.

Every day.I'm going to explain how I think Airbnb works, why pricing is the lever that moves the most weight, and how to use it to climb out of the "invisible listing" trap and into the top tier where the platform starts working for you, not against you.This is my worldview, based on a lot of observation, a lot of testing, and a lot of conversations with owners, operators, and the masterminds I participate in, with that...take it with a grain of salt. 

only one of the 2 units was picked in the lottery even though it was a weighted lottery (max weight for 5 years of STR operations with proof you paid the TOT for those 5 years - implication is the city does not know who has been paying the required TOT).

Evan and Charles have some great answers, but for me, I weight cashflow more than cap rate. 

I also put more weight on the income approach.

Buyers place a lot of weight on reliability and clean documentation.