Home Buying in Saint Paul>Question Details

Mila, Home Buyer in Saint Paul, MN

Would Fannie Mae take a 70% list price offer, if I pay cash?

Asked by Mila, Saint Paul, MN Wed Jul 13, 2011

The house is in a fairly good neighborhood in a St. Paul MN suburb. It is listed at 129,000, its been on the market for 61 days, and took a 10,000 dollar price reduction 30 days ago. It is 4br/1and 3/4 bath. Similar houses have sold for between 70000-160000 in the area (the ones on the higher end didn't need any work) The house is not livable, because the copper pipes have been removed and the exhaust fan in the bathroom has been vented through the garage (which the state has deemed hazardous). Also it has no appliances and needs a new roof, amongst other things. No bank will issue a mortgage because the house is unlivable. So with all that said, do you think that Fannie Mae will accept a 70% cash offer?

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Mila, Great question! The price of any home should be based on its location and condition. This sounds like it will need some additional investment as well, take that into consideration as you consider this property. This is where having a seasoned buyers agent to help you will be to your advantage.

Banks look at a variety of things when they consider an offer. Such has how many showings have their been, what does the current BPO (Brokers Price Opinion) recommend and have there been other offers. So unless your dealing in a multiple offer situation your chances are good to submit once you and your realtor decide to move forward.

Good Luck and Best Wishes

Chris Rocheford
Keller Williams Realty Integrity NW
Licensed in MN
0 votes Thank Flag Link Wed Jul 13, 2011
If the house is un-inhabitable, it will need a cash offer, or, one of the new loans where they piggy-back a re-hab loan with the regular loan.

If you have CASH you have a big advantage.

The only negative for you is if there are multiple offers.

Go for it.

Good luck and may God bless
0 votes Thank Flag Link Wed Jul 13, 2011
If it's been 30 days, it's probably due for another price reduction of either 10 percent or $10,000. If you're not working with a buyers agent, check with the listing agent to see if another price reduction is in the works. Otherwise have your agent contact the listing agent. Often the sellers will ask the listing agent to do an updated BPO to determine current market value. If they have requested a new one, chances are they're moving towards another discount.
0 votes Thank Flag Link Wed Jul 13, 2011
As others have said, make an offer that is in the range of reasonable and include your justification for doing so and your offer is likely to be treated seriously. 30% of all sales in the Twin Cities right now are cash offers and on REOs in that price point it is probably double that. Cash is great, but it isn't the Holy Grail.
Web Reference: http://www.AaronSOLD.com
0 votes Thank Flag Link Wed Jul 13, 2011
Thanks for the great advice!! I figure that the 70% cash offer is a long shot. I am going to do more research and get my facts straight to decide if this property is even one I should consider!
0 votes Thank Flag Link Wed Jul 13, 2011
My rational behind a low offer is the cost of the repairs. And that I have spoke with 3 banks, 2 of the 3 will not finance the mortgage unless it is livable. Other offers have fell through because of this.
0 votes Thank Flag Link Wed Jul 13, 2011
Some agents will say that you can make any offer. That you can't insult the bank.

Well, as an REO listing agent for the last 8 years you may be surprised to hear that you can insult the bank and actually do more damage when making a low ball offer than not.

You need to be able to negotiate from a position of strength. That means you can justify the offer with facts and figures. Banks do recognize those as honest negotiations and not just throwing out a figure and hoping it works.

You say it needs work. Put together cost figures for the bank to see. They know the condition and may have estimates of their own but you will come across as a serious buyer. And remember that cost of work is not just a dollar figure but time and hassle for the buyer. Let you in on a secret. Most banks recognize that for every dollar of repairs it reduces the value by a dollar and a half.

Just your homework done and if you can justify the offer, go for it. Oh, and expect them to counter fairly hard at first. That's why it's good to have an agent experienced in working with REOs on your side.

Good luck.

Steele V. Propp
Foreclosure Specialist
Home Avenue Real Estate
Serving the Entire 9 County Metro
0 votes Thank Flag Link Wed Jul 13, 2011
Why would you think that cash would sway them, if it were financed they would get their asking price! Stop thinking cash is this power tool for discounts!
0 votes Thank Flag Link Wed Jul 13, 2011
Highly doubt it and it has not been on the market that long. 90k even with cash is a pretty steep discount. What does the 70k ones look like?

If I knew the actual physical property address I could maybe tell you more.

Good luck!
0 votes Thank Flag Link Wed Jul 13, 2011
With these REO listings you really have nothing to lose unless its a multiple offer situation. More than likely you will at least get a counter offer so go put that offer in and be the first in line. Hopefully you get it and you are a success story for others. Good Luck!
Web Reference: http://www.realtordamon.com
0 votes Thank Flag Link Wed Jul 13, 2011
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