Fannie Mae - WTF - You'd Think They'd Just Want to Sell It

Jan's been restless lately and she's on the prowl for another place to rehab.  We found a ban owned condo in a nearby golf course community named Peridia where we've rehabbed 3 houses and hooked up with Roger Cumbie to take a look a few days after it went on the market.  The place actually looked pretty good and I was glad to see that the whole place had already been tiled (my back is thankful).  I estimated that we'd possibly get by with only putting around $5K into it before we would get it back on the market which would mean that we'd have it on the market in a couple of weeks since it was almost all cosmetic stuff that we would do.

HOWEVER much too our amazement the bank actually had placed a few conditions on the property purchase. Some of this stuff we've seen before in the old days when investors were a dime a dozen.

SURPRISE 1

The first thing was that for the first two weeks it was on the market the property could not be purchased by an investor - in other words someone who was not going to live in the unit for the first year.  If you disregarded this and did buy and sell the bank reserved the right to come after you for money.. basically a penalty clause.  So we decided to wait the two weeks and see if the property was still available.

Turns out we were the only ones who looked at the property so we decided to put an offer in before the asking price primarily because no one else looked  at the property and also so we can get the property for as little as possible (we are cheap - but  prefer to think of us as helping someone get rid a property)

SURPRISE 2

So we could live with the first surprise but the second one was a bit more restrictive.  In the event we sold the house within 3 months for more than 20% that what we bought it for there was another penalty.  So say we bought the place for $100K we could not sell it for more than $120K within the first three months we owned it...  which by the way is prime time for resale here in Florida (snow bird season first 4 months of the year).   There goes the profit and the prime season to sell..

So what to do?

What we decided is to make an even lower offer because of what I call the "time of money".  Seems they are not really all that keen to sell the place so perhaps a low offer will wake them up!  We'll let you know it goes...don't they want to sell the place?  and why rule out buyers that have money regardless of how long they may own.. besides we're going to do the work to make it sellable so why shouldn't we reap the reward.

Real question is the logic behind the restrictions..

Well it turns out the house is a Fannie Mae house and all the surprises and all the surprises are part of the Fannie Mae Addendum that they add to all sales contracts..  There some resources on the web such as Home Path that provide information on Fannie Mae properties and several blogs and are specifically about the addendum such as Source of Title.  Source of Title has a entire list of links to other blogs that discuss the legal impacts of purchasing property.