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Asked by Sandra, Houston, TX Sun Mar 6, 2011

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Answers

11
Brenda Jones, Agent, Houston, TX
Sun Mar 6, 2011
If you are purchasing a FNMA REO (Real Estate Owned) home, FNMA will require 10% down. EXCEPTION: Sometimes, If the Buyer is pre-approved for a FNMA "HomePath" loan (available only to Buyers who intend to occupy the home as their primary residence) more friendly terms may be available. See: http://www.homepath.com/financing/index.html

Because most Buyers don't like surprises, I want you to be completely aware that IF your offer is accepted by FNMA, your entire offer as written (on TREC form "One to Four Family Residential Contract") will be thrown out the window. That is, FNMA will require that the purchase be on their terms and that Buyer accept and sign their form ("Real Estate Purchase Addendum") which supersedes the first. An agent experienced in FNMA REO's can provide you with a draft copy of this Addendum so that you can prepare for and understand the terms of the sale.

When approaching a distressed property my best advice is to always seek the help of an experienced, licensed agent/advocate, be brave and be smart!

Best of luck to you!

Real Estate Brenda
1 vote
Gabriel Cada…, Agent, TOMBALL, TX
Sun Mar 6, 2011
The 10% Earnest Money needed (once your offer is accepted) when you submit a cash offer for a Fannie Mae property is a requirement from Fannie Mae, not your agent; he is only following up the instructions for the agents put in the listing by the seller. It is a foreclosure and the sale is in as is condition. There is not option fee to send once acceptance of the offer, but you will have up to 10 days to inspect the property or change your mind if the repairs are higher than expected.

I hope this answer your concerns.

Regards,
1 vote
Phil Rotondo, Agent, Melbourne, FL
Sun Mar 6, 2011
Good Morning Sandra;
In most cases, Cash offers for Fannie Mae Homes require a 10% down payment along with proof-of-funds letter/statement from your bank.
Once the contract has been accepted by both parties there is a "X"-day Right-to-Inspect / Right-to Cancel clause which allows you to cancel the contract if an inspection is not satisfactory. The usual time is somewhere around 7 to 10 days. In the event you cancel during the period you receive your escrow deposit back.
Web Reference:  http://www.321property.com
1 vote
Gabriel Cada…, Agent, TOMBALL, TX
Tue Mar 8, 2011
In a Fannie Mae transaction, the Real Estate Purchase Addendum supersedes the TREC contract, so the Option Fee they require is $0 and you have up to 10 days to inspect the property and change your mind if the deal is not good as it appeared to be; in this case your Earnest Money will be returned. Technically there is not option fee but you have the time to do your due diligence and inspect the property to understand what you are purchasing.
0 votes
Laura Austin, Agent, Conroe, TX
Mon Mar 7, 2011
Read paragraph 23 very carefully; if there is no option fee paid the buyer does not have the unrestricted right to terminate the contract.
0 votes
Don Groff, Agent, Austin, TX
Sun Mar 6, 2011
It's Fannie Mae, not your agent requiring the 10%. This is typical. Also required is that you use their Real Estate Purchase Addendum instead of the traditional residential contracts we use most real estate transactions. Even with no earnest money you do have an option period where you can withdraw your offer and get your earnest monies returned.

Make sure you are using an experienced agent to ensure your best interests are being represented to the fullest. Good luck on your purchase.


Don Groff
REALTOR | Mortgage Broker
Keller Williams Realty | 360 Lending Group
512.669.5599
listings@dongroff.com
0 votes
David Tansey, Agent, Houston, TX
Sun Mar 6, 2011
Your agent can't require you to do anything. Your agent is a fiduciary executing your lawful wishes. They may have suggested the high earnest to make your offer more attractive.
0 votes
Margaret Tsa…, Agent, Houston, TX
Sun Mar 6, 2011
The usual is 1% down. There should be an Inspection Period of 7-10 days negotiated where you have the Option to withdraw your offer if Inspections do not go well. Keep in mind that you are purchasing it
'as is' and the seller will not repair or negotiate repairs. Also, if it is an all cash deal, you will need to provide proof of funds to the seller. Good Luck
0 votes
Linda Lorenzo, Agent, McKinney, TX
Sun Mar 6, 2011
I think you got your answer on the down payment from Phil I wanted to mention that if you paid $0 for an option fee, you do not have an option. The reason you pay money for the option (typically bank owned properties don't do options) is so that you can back out for any reason (not just an unsatisfactory inspection). You really need to talk to your Realtor about the way the option vs the inspection works.
0 votes
LaWanda Lend…, Agent, Houston, TX
Sun Mar 6, 2011
Both agents answered your question the way I would have. When I have worked with my buyers on the purchase of Fannie Mae Homes they were only required to put down $500-1000. Now, is the home going to be your primary residence because if not, the earnest money could be a little larger. I suggest asking your agent all your questions and they should be able to reassure you on your exit options and the reasons. Do you trust your agent? Does the agent work for the seller also?
Web Reference:  http://www.HAR.com/LLendsey
0 votes
Debra Thomps…, Agent, Houston, TX
Sun Mar 6, 2011
Hi Sandra,

If I understand your question, your agent has requested you put down 10% as earnest money? I would ask your agent who is requiring this amount of money as earnest money & why. 17 yrs in the business I have never seen anyone requiring 10% earnest money. I would really question this.
0 votes
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