Return to the Buying and Selling Homes Forum | Post a Follow-Up

 o
How much to offer on Freddie Mac owned

Posted by riosamba (My Page) on
Sat, Jun 13, 09 at 13:20

I'm a longtime GW member but an infrequent poster. My husband and I have found a house that we like very much but we are unsure how much to offer.

Freddie Mac owns the house and it has been on and off the market (mostly on) for about a year. It's located in a well established neighborhood in a Denver suburb with good schools. This suburb has had its share of foreclosures but is not a ghost town by any means. The asking price is $269,000. The house doesn't appear to need major work but has cosmetic issues (poorly done diy hardwoods, old carpet, popcorn ceilings, bad paint). It also has a large deck that needs refinishing. All of the appliances are gone except the dishwasher. The layout is odd but would work for us. It is not "turnkey" in the HGTV sense, but once appliances are in it would be livable.

The house has had 4 realtors.

Comps are a hard question because nothing has sold in the neighborhood since 2007. Our agent says this means the neighborhood is stable. DH feels that it means the market is dead!

There are four other homes on the market in the same neighborhood:
1. $288,900 This house has nearly identical finished square footage and has been completely updated (floor plan is not odd). Owned by a real person on a lot that it is 3000 sq ft larger (corner lot). Mountain views from the deck. On the market at this price for at least 6 months.

2. $289,000 This house is larger by 1000+ square feet (lot is also 1000 sq ft larger than "ours")and is beautiful but has significant structural issues. It's bank owned and they want a cash buyer. Price recently reduced about $30k.

3. $329,900 This house has nearly identical square footage (not an odd layout) and lot size, has been updated with granite/stainless & is in excellent condition. Price has been reduced from $343,000. It sold for $356,000 in 2007 and is owned by a real person.

4.$362,000 This house has nearly identical square footage/layout. It's very similar to the corner lot house. It's been totally redone w/ granite, stainless, etc, has a 50 year roof and some mountain views. It's owned by a real person who paid $329,000 for it in 2006.

We can offer a reasonably quick close and the only contingency will be inspection (so we can walk in case of major problems).

Any ideas on how low we can go? We do love the house and neighborhood, but we can buy in a nearby neighborhood of older ranches (same school district) that are only a little smaller for around $200,000 (and quite possibly less).

Thank you so much for reading this!


Follow-Up Postings:

 o
RE: How much to offer on Freddie Mac owned

It seems to me you ought to offer rather low. You will have expenes bringing it up to snuff. Also, the other houses may be listed at a close price, but they have not sold either. FMac may well own enough houses that they would love to sell at a bargain price. I have heard such discussions about bank owned foreclosed homes these days on the radio--work with the bank, start quite low, allow enough time to hammer out a deal. They would love to reduce inventory.


 o
RE: How much to offer on Freddie Mac owned

Personally, I'd be wondering why it's been on the market so long and gone through four realtors. I'm thinking maybe there have been offers and then the inspection found serious problems, hence not being sold in a desirable area.


 o
RE: How much to offer on Freddie Mac owned

Sheila, we keep hearing all of those stories as well, and hope this house will be a happy ending for us.

Sparksals, that may well be the case. DH and our agent have gone over it with a fine toothed comb and found nothing bad, but that doesn't mean there isn't something lurking! We will have a thorough inspection. The biggest problem out here is expansive soils, and we see no indication of any trouble with this house, so that is encouraging. No signs of water damage anywhere.


 o
RE: How much to offer on Freddie Mac owned

It sounds like you are a relatively unmotivated cash buyer; the perfect position in this market. I dont know what REOs are selling for in your area but I have a few comments:

1)All the financial institutions (including Freddie) will take a minimally contingent, all cash offer, with a quick close very seriously -- especially for a home thats been on the market for a while. Id find an agent used to dealing with REOs (not short sales as many now try to specialize in). These will tend to be very aggressive and typically work with investors, which I know you are not. Have your agent call the previous agents to find out whats going on with this house.
2)Forget about what any home sold for in 2006, 2007, or even 2008. If you already have an agent attempting to use these as comps, as nice as he or she is, the numbers are not useful -- as are current asking prices. Anything beyond say three to six months ago is completely irrelevant in todays market so it sounds like you dont have much to go on. The good news is neither does Freddie, so you can call the shots. The only thing you can be certain of is that the maximum you know this house will not sell for is $269k. Do you know much work it needs to put it into tip-top shape?
3)Assuming it really is only cosmetic, an experienced ROE agent should be able to walk into the house and give you an excellent ballpark idea of the fix-up costs. Assume the furnace and a/c do not work since you will not be able to check them. Add maybe 25% to any estimate but use $15k or $20k minimum, and subtract from $269. This would be a full price offer if you really want to pay that much. I would offer much lower, but I dont know the house or how much you like it.

Good luck.


 o
RE: How much to offer on Freddie Mac owned

I was wondering about this...
"Have your agent call the previous agents to find out whats going on with this house."

Are other agents allowed to 'tell' or are there legal issues with that?

And whats the more attractive part of a "cash offer with few contingencies"?
The cash part or the few contingencies?


 o
RE: How much to offer on Freddie Mac owned

"There are four other homes on the market in the same neighborhood:
1. $288,900 This house has nearly identical finished square footage and has been completely updated (floor plan is not odd). Owned by a real person on a lot that it is 3000 sq ft larger (corner lot). Mountain views from the deck. On the market at this price for at least 6 months."


Unless you mind living on a corner, I think this house sounds better. It is not a foreclosure, does not have an odd layout, is completely updated, is on a much larger lot and has nice views. That alone would make it worth the extra 19k to me.

Since this house has been on the market for 6 months and has plenty of competition, I'll bet that this owner might be willing to welcome a cash offer of the same price the other house is going for.


 o
RE: How much to offer on Freddie Mac owned

Jeff, I think you make a great point- the numbers really don't mean much at this point! Agent is not trying to use them to get us to make a big offer. He knows we want to do something low and is ok with that. I LOVE the suggestion to call the other agents. Allowed or not, I'll just bet that some gossip happens.

Mary, I think many sellers like offers with quick closings and few contingencies because it means the deal will be done soon and there aren't as many ways for it to go wrong.

Dreamgarden, I hear what you are saying. The other house is "nicer," no doubt about it, but we have already decided that if we can't make out like bandits on the odd one (which suits us and feels like home), we will buy in the ranch neighborhood. The houses in that neighborhood meet our needs; they're adequate. We love the neighborhood of the odd house and would be thrilled to move into it. However, given the state of the economy, looming college tuition, etc., we want to be very conservative in our spending right now.

Thank you so much for all of the thoughts, ideas, and information. They are really helping us clear our heads.


 o
RE: How much to offer on Freddie Mac owned

Find out what the value of the note against the house was written for.

This will tell you how far in the hole Freddie may be.


 o
RE: How much to offer on Freddie Mac owned

Are those 4 properties you noted, active listings? Now I read again, you state they are "on the market".

Those are not really comps ... they haven't sold. Ask your agent to find you recent comps that have just closed, that will give you a better idea of the actual market.


 o
RE: How much to offer on Freddie Mac owned

Brickeyee, the foreclosure amount was just over $278,000.

Pam, yes those are active listings. The last houses to sell in the neighborhood went for $275,000 & 296,000 in 2007. The $275k house was very similar to "ours" but without the cosmetic issues and a floorplan that is probably more appealing to a greater number of people. The $296k house was similar in size but has some extras (has wet bar, for example), more formal floor plan, and granite, etc. It was in very nice condition with some new mechanicals.

We are putting in our offer tomorrow. Agent is advising us not to go below $207,000. We may start a little lower.


 o
RE: How much to offer on Freddie Mac owned

IMO, they will sell for about $225000.
If it helps your case, send in those comps from 2007 at $275000, and let the Seller know that the market has come down X%, and also let them know of the real condition of the home. Remember, they have never seen the home in person.
Good Luck.


 o
RE: How much to offer on Freddie Mac owned

"Brickeyee, the foreclosure amount was just over $278,000."

Note or note plus foreclosure costs?

Unless you have seen a copy of the recorded note do not rely on anything else.


 o
RE: How much to offer on Freddie Mac owned

Well, fiddle-dee-dee! After a year on the market somebody else beat us to the punch. The house went under contract a few hours before our offer was done. It will be interesting to see how much it sold for (I'll update when it is recorded). I don't think we are going to put in a backup bid, but if it should fall out of contract while we're still looking we may still offer.

Thank you for all your thoughts, ideas, and information.


 o
RE: How much to offer on Freddie Mac owned

I think you should offer on the $288k home and try to get it for $225k-$235k range.

I bet the owner/agent is thinking of lowering the price soon anyway if 6 months on market. If you don't get it for a good price,then move on to Plan B.

In the mean time, the other Freddy Mac home might fall out of contract. But you could very well get the $288k home for $225k-$235k. Especially if it is vacant or if the owner really wants to sell. They could very well be sitting on that home for another year+ and the prices could fall even lower if they don't sell to you, and if the owner is an agent, the owner knows this. Take advantage of the market and the fact that you are a cash buyer.


 o
RE: How much to offer on Freddie Mac owned

That is an interesting suggestion, Sweet Tea, I will have to discuss it with DH:)


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Buying and Selling Homes Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Please review our Rules of Play before posting.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here