tag:blogger.com,1999:blog-3745717139514801118.post6006974893663382899..comments2014-09-14T04:49:25.448-07:00Comments on PeonInChief: A Few Things FinancialPeonInChiefhttp://www.blogger.com/profile/17611581585285022906noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3745717139514801118.post-15599490090837656742010-04-22T18:38:23.554-07:002010-04-22T18:38:23.554-07:00Thanks for this post, I'll add my experience h...Thanks for this post, I'll add my experience here in hopes it's as valuable to someone else as this blog has been to me since I first got notice that the house I was renting had been foreclosed on.<br /><br />It ended up being owned by Fannie Mae (the quasi-government entity that guaranteed the mortgage) after foreclosure and they were quick to post a notice on my door that I needed to contact a local real estate broker who was handling the disposition of the property for them in order to understand what my options were. Basically I could leave in 60 days and get $1000 or stay for 90 and get kicked out. A third option that I didn't expect was also offered - I could buy it for a discount! Fannie Mae would get two appraisals on the house and then come back with a price to buy it and would accept a significant discount to that price based on their ease of disposition and the fact that they didn't have to make someone move.<br /><br />How interesting. But to do that I needed to prove I had the wherewithal to actually buy the place by either getting a pre-approval letter from a lender or proof of funds in my bank account. If you've got two years worth of tax returns that show enough income to pay the rent and a halfway decent credit score then you have a good chance of getting a pre-approval letter from a lender. In my case, based on the fact that I had an opportunity to buy the house at a below market rate, my parents decided to loan me the money to do that by agreeing to hold a mortgage on it. Besides, where else could they get that kind of interest on an investment these days with a fair amount of assurance their capital would be protected?<br /><br />Note: to do a deal like this with Fannie Mae you need to be able to take title in your own name. My parents couldn't buy it and then rent it back to me, for instance.<br /><br />After about a month Fannie Mae came back with a price that was so inflated it shocked me. I had been watching the market in this neighborhood very closely and had a good idea what the place could actually sell for. My own observations were backed up by the comparable sales given to me by the broker, who is now serving as a "dual agent" for both me and Fannie Mae.<br /><br />Their price was about 10% above the market value and so I countered back at 10% below the market. With my offer I also sent a note explaining why it was so far below their price and the broker came back a couple of days later saying they were going to get yet another appraisal. So far so good.<br /><br />My experience may be an isolated incident but I'd recommend doing your own homework to establish what a fair market price is for a place you're considering buying and not just take someone else's word for it.<br /><br />Wish me luck!Anonymousnoreply@blogger.com