Determining your REO offer?

I’ve researched all the info available at the courthouse, now…exactly how do you guys decide what to offer?

I’ve got a 2,000 sqft 3/2 with an acre that has FMV of $108,000. Freddie Mac owns it and wants $112,000, but Wells Fargo made the loan in 2001 at $108,000.

What’s the best method to determine what they’ll accept?

Also, does anyone know the typical percentage discount Fannie Mae and Freddie Mac buy these mortgages for?

Thanks again.

Popular question.

What you need to realize about SS’s is that each and every one is different. Think of a SS as a snowflake, no two are alike.

To determine what you should offer you need to subtract the expenses from the FMV such as rehab, taxes, closing cost, realtor, etc. Then I take off 10 to 20 points just for GP. Then the negotiation starts, I go back and forth with the lender until we come to a mutual agreement or until the deal is dead. Which ever comes first.


Freddie Mac owns it…

The previous loan amount is irrelevant. Freddie Mac based thier list price on 2 or 3 BPO’s performed on the property. I do backup BPO’s for FreddieMac.
As to what to offer, there is no set formula that I have ever seen for Freddie or Fannie properties. All I can say is they usually don’t take low ball offers. But, also, every property is different.

This property needs about $10,000 in repairs so, how do I present the itemized repairs to them.?

You don’t. They won’t look at it. To them is doesn’t matter. They already have the reports form the agents, including photos and construction cost estimates for any repairs. All I can tell you is offer whatever you feel happy with. If the property is priced too high, then it will sit there until they do price reductions or someother person puts in a high enough offer. Call the listing
Broker, if its a FreddieMAc, then the Broker is highly experienced. Those accounts are extremely hard to get. Tell the Broker what you want to offer and see what he says. If he laughs, some will, then wait til it drops. Don’t waste anymore time, move on down the road.

you’re being very helpful. This particular broker in our area has a reputation for “not giving a crap” to quote others. He will honestly say, “I don’t feel like talking about houses this week, give me a call next week and we’ll take a look.” Is there anyone else that I can contact about his property? Who will decide to either accept the offer or not and can I contact that person? Finally, are there any little secrets that would be helpful?

Thanks again,

I am sorry to hear that about that particular Broker. These kind aggravate the heck out of me. This REO account is extremely difficult to get. I hope you can get someone on the phone and gripe about the Brokers responses. They would not be pleased. Probably cost him the account.

Usually the REO rep will be able to accept an offer as long as it is within their standard guidelines. If not, then they go to their manager and so on. But there are many factors. If there is an investor, then the asset company will have to get their approval.

Your best option might be to get another local agent on your side. Have an agent submit your offer. The Broker will be forced to act.

FMV = 108k
Listed for $112k.
Repairs $10k.

I hope you’re trying to buy this as an owner occupant. I can’t imagine this being a “rehab” opportunity with these numbers. imo, They (FM)won’t take an offer low enough to make this deal worth it.

FannieMe/FreddieMac (in my area) have, for the most part, never been worth the time to pursue as an investor. Both like to rehab and market more to owner occupants. Freddie once offered agent selling bonuses for owner occupants on particular properties. They are geared more to people living in them first. The FannieMae Broker in my area is a good friend. They have 2 pieces of junk, 45 minutes away, that they are having to rehab.

Sorry, I can’t offer better advice. Good Luck!

Best advice, if you’ve just got to make an offer, make it based off of your numbers and your guidelines for determining what makes a deal a deal, then move on.

As REO has pointed out, FM/Freddie Mac don’t seem too interested in investor offers and do usually rehab their properties to the point where first time homebuyers are interested, plus they usually add attractive OO financing, too.

But just to clarify. NEVER base your offer on any property on what you think the seller will accept. ALWAYS base your offers on your figures and your guidelines for what deal is. If it doesn’t work, then find another.