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Old 07-30-2014, 09:35 AM
 
58 posts, read 96,374 times
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We're in the market for a house and we've take interest in a few homepath homes. Since then, I've been checking in with a Homepath realtor that will be listing a house that we really like. However, she gave us a price that the home would be listed around and it was Outrageous - it's a price for almost 30k MORE than a house next door that sold last month with the same square footage. The home was also updated nicely in every room but the kitchen. The foreclosed house (Which doesn't have any updates) will be going through the "new" program or whatever it's called where Fannie Mae will fix up the property. However, I have seen other properties from Fannie Mae that have been "fixed up" and it doesn't look like they do much. Paint, carpet and cheap looking appliances. They didn't even paint over the nasty dark wood panneling in one house.

These other properties are way over priced as well. It's not uncommon for them to sit on the market for a while. I'm in a market where homes usually aren't sitting around for more than month - Most foreclosures are going within a week. These homepath properties have been on the market for two months. What's the deal with Fannie Mae??
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Old 07-30-2014, 10:13 AM
 
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They are crazy. Back in 2012 we witnessed bidding wars for homepath properties. Not any more. We see houses sitting on the market way overpriced for 3-4 months as of now with no interest. I must add most homepath properties are full of construction defects. So their new program aka lets hide all issues should be a warning for buyers.

Most homepath houses in my area are at 2006 price level!!!
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Old 07-30-2014, 10:23 AM
 
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I bought a Fannie Mae home 3 months ago and had/have a good relationship with the listing agent. I asked her about pricing (because the home we bought was initially listed for $40k more than what we paid/what an appraiser approved), and she said that it done via formula that looks at average prices within a radius. So, if there is a very well to do area within 10~20 miles, prices start substantially high. Similarly, if the home is in a well-to-do pocket and surrounded by lower priced markets then the price starts artificially low (and these are the "deals" everyone seems to focus on, though they are the minority of all cases).

Here's some advice. Before I offer it I want to point out that I'm offering it in an effort to keep you from going through some of the poo I've been through, I don't "get" anything for it past feeling good for trying to help someone. Similarly, I'm NOT a professional in the RE business so this is worth exactly what you paid for it...

Fannie Mae, according to the above listing agent, puts a lot of pressure on the listing agents to have a home sold in 3 months.

They will adjust the price roughly every 30~45 days. In our case, it was ~8% of the asking value each time (ours went through 2 and was just shy of a 3rd, we offered just under what they were Likely going to adjust the price to). She had mentioned that 7~8% was the norm in her experience (Rural GA).

Now, this is just simple home-buying advice.... set your price Now and do not budge. An item, ANY item, is only worth what someone will pay for it so know what the home is worth to You. This gets complicated if you use the Fannie Mae offer for renovation monies because it comes with a LOT of stipulations... like you Must use only contractors that they have approved of (and in my area, those people charged a ~20% premium, your money won't go as far and you're running the risk of being house-poor/upside down right from the start). Oh, you are more in the palm of their hand when it comes to closing, the loan process, and all other aspects of the purchase process in general. It was a no-brainer to avoid that mess when I asked the listing agent and she even recommended that we avoid the option at all costs... FWIW, this was the 4th home we've purchased and it was complicated enough with a Normal loan.

The #1 mistake people make when buying a home is getting emotionally vested... "oh, our couch would look Great right there" and "I can't wait to throw a housewarming party on the back patio/porch" type talk and thoughts are key indicators. Once you get emotional, it gets Really difficult to look at the process with logic... and that costs money. So don't get your hear set on any one house until After you've secured a loan and been through a great home inspection process. I can't even tell you how many homes we've been interested in over the various years that looked great until I did a basic inspection and found issues that were disqualifiers (foundation/settling issues almost exclusively). The most recent was a home where the inspector found the master bath subfloor was rotten through and in need of complete replacement, including the floor joists ~ and the sellers were unwilling/unable to accommodate the price for repairs (they were drastically upside down and already borrowing money to pay off the balance of their loan at our initial asking price.... the dangers of being house poor).

Know that this process is a long one. We were tied up in the purchase of this home for 3 solid months (vs the 5~6 weeks of a normal purchase). Fannie Mae played all sorts of games, from asking for a "highest and best" claiming there were multiple offers, and Then spending a month trying to negotiate a higher price AFTER our "highest and best" (fwiw, we went up a total of $1000, in $200 increments over 5 of these BS sessions that lasted through most of one month). My wife started to break on the emotional side near the end of that month, but thankfully our listing agent helped her understand that these are JUST games to try and eek out one more dollar and mean nothing, that she'd never lost a sale at this point due to Fannie Mae backing out.

By far, this was the most nerve-racking buying process and we were already living in a home we owned at the time (and is a rental now). It's not like we were moving, in a rush, paying rent, under a deadline or anything else... if we didn't get the house it honestly wouldn't matter. I can't even imagine how much worse it would be otherwise... so prepare yourself for WAY more mental stress than you can imagine if you move forward with this particular property.

Oh, and treat it like an ebay auction. Once you've decided your price (seriously, that is the most important step right now), stand fast. If someone else gets it, then they were willing to spend more than you for it no matter what... it was simply worth More to them than it was to you. We missed out on a house like this only to find out a year later that they paid a full $20,000 MORE than our best price... and the home had a ton of termite damage, needed a full HVAC gut (power was off when I inspected) and I see them with loads of remodeling debris still. Glad we missed out on that one.

Good luck. If you miss one, a better will will be just around the corner (has been true 100% of the time for us).
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Old 07-30-2014, 10:57 AM
 
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Great advice, I really appreciate it. I figured getting involved with Fannie Mae would make the process more interesting.

Although I say our market is hot right now, I 100% believe that it is slightly inflated by investors. We've been beat out on a few homes that we REALLY liked, only to find out a "Flipper" purchased it. I understand that is their job, but they're taking away from Owner Occupants.

It'll be an interesting search. We've been at it for 1 month. Inventory is shrinking as the summer ends...at least in our area.
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Old 07-30-2014, 02:23 PM
 
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Brian, thank you for sharing your experience!

We personally had no luck with homepath properties. We really liked one and it was sold closed to our price, but then we learned 1) listing agent had these buyers as his pocket buyers and 2) they went with homepath mortgage including renovation one (for $30K).
As far as we went every time were "best and highest" game which was annoying and 2 years ago market was crazy. We had to go and see the house within a day after listing... and make an offer the same day and still were in multiple offers situation.

Bidding wars are bad. Some people are bidding like crazy and overpaying... Oh well.

The only way to fight with flippers is to avoid their flipped houses at all costs...
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Old 07-31-2014, 09:31 AM
 
58 posts, read 96,374 times
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Quote:
Originally Posted by EngGirl View Post

The only way to fight with flippers is to avoid their flipped houses at all costs...
This X 100000.

I absouletly 100% will NEVER allow myself to buy a flipped house. Luckily, they're pretty easy to spot. Either way, I Always check county records and I steer clear of any house that is for sale as "recently upgraded" and the owners have only had the deed for a few months.

I understand that flipping does do some good, but with all of the amatures out there, there are neighborhoods that we're being priced out of that we would have normally been able to afford easily. We don't want ot pay/can't pay 110% markup on granite countertops. Really, we'd be just fine without them. So now, we're being pushed into cheaper neighborhoods with more crime.

I'm also weary of the work done on the houses. Watching HGTV shows (which is a root cause in this flipping madness) shows just how many corners they cut and how they have an extreme disregard for issues just to save a buck. Usually, it's not with cosmetic stuff - it's with electrical, pumbing, or foundation stuff which could lead to serious issues down the road.
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Old 07-31-2014, 01:03 PM
 
3,826 posts, read 5,765,428 times
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Quote:
Originally Posted by Frog_fan89 View Post
This X 100000.

I absouletly 100% will NEVER allow myself to buy a flipped house. Luckily, they're pretty easy to spot. Either way, I Always check county records and I steer clear of any house that is for sale as "recently upgraded" and the owners have only had the deed for a few months.

I understand that flipping does do some good, but with all of the amatures out there, there are neighborhoods that we're being priced out of that we would have normally been able to afford easily. We don't want ot pay/can't pay 110% markup on granite countertops. Really, we'd be just fine without them. So now, we're being pushed into cheaper neighborhoods with more crime.

I'm also weary of the work done on the houses. Watching HGTV shows (which is a root cause in this flipping madness) shows just how many corners they cut and how they have an extreme disregard for issues just to save a buck. Usually, it's not with cosmetic stuff - it's with electrical, pumbing, or foundation stuff which could lead to serious issues down the road.
You are absolutely correct!
I wish more people would avoid flipped properties. Flipping houses is a business for some people. I personally know few people who live on these type of deals (Nevada, California and Florida). The matter of fact I was advised by a flipper to stay away from these properties because everything they do is just to please buyers eyes. They DO NOT do any major renovations, ever. They rather hide it somehow. They don't have to provide property disclosures since they never occupied these properties.

Here is an example: leakage through the wall. All they did was paint the house outside, changed damaged drywall inside, repainted, replaced carpet and it's done. I bet in a year this wall will be leaking again because issue was never resolved, but temporary hidden.

Another example - leaking on the ceiling. Their quick fix is to replace and repaint drywall on the ceiling. Anything damaged behind the drywall stays as it is. There is absolutely NO WAY for ANY inspector to find these kind of issues.

Basically, people who are buying flipped houses might risk their own money... they might discover what is inside hidden under pretty colored drywall, but it's going to be too late.

By the way, in my area I noticed foreclosed bank owned properties are going through the same thing now. Banks are hiring people to get the house in "move-in ready" condition, but all they do is only cosmetics.
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Old 07-31-2014, 01:52 PM
 
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Quote:
Originally Posted by Frog_fan89 View Post
Usually, it's not with cosmetic stuff - it's with electrical, pumbing, or foundation stuff which could lead to serious issues down the road.
You don't say? I *AM* an amateur, but smart enough to use google... FWIW, these images are thanks to ignorant DIYers who owned the home for ~10 years...

I had dozens of these to deal with:





A half dozen or so light fixtures wired like this:



And I don't have photos of the fact that EVERY electrical box (can lights, water heater, etc...) had the wire run without a romex connector. There was evidence of shorting/charring already from the sheathing wearing through. Oh, and there were 6 live lines that had a drop that was simply laying there, just cut and dangling.... 2 of them were 220 and one of those was outside in the back yard at about belly level to a toddler

That's not getting into the plumbing (sink P-traps just slid inside PVC with some glue, no patch adapters ` 1/3~1/4 of the connections were dry fit without glue, routing is haphazard and without proper drainage slope).


While I know full well the root cause of my problems (owner was Army, he invited his Army buddies over to help and they drinking copious sums of beer... at least according to 3 neighbors), I've seen similar issues in "flipped" homes. Oddly enough, there was Zero evidence in my first 2 homes... bought from the original occupants who were Well into retirement age at the time of the sale. I think DIYers were better educated before those TV channels came along.

And lucky me, I think we May have some foundation issues as well due to water pooling.... the main culprit? gutters that hadn't been cleaned in years.... there are clay drains all around the property, most where doing this:



And yes, that water is shooting up and out. I dug a foot of "compost" out of the drain only to find a piece of tile had fallen across the drain and was keeping everything else from flowing well. In the rest of the gutters, there were trees, the largest earthworms I think I've ever seen, 4~5 ant colonies, roaches out that wazoo (it's GA, they love anywhere with rotten vegetation). Had to gut a bathroom due to water damage too... vent stack that needed about 3 good squeezes of silicone from a caulk tube.

Have I *sighed* yet in this thread? *sigh*

I should add that we paid less for the house than you would pay for a new Cadillac and I knew of most of these issues going in. Even with 4 months of work before getting to move in, and probably another couple of years before it's Really settled, it's absolutely worth it. Perhaps too ambitious for a first-timer, but this is my 4th home... plus my FIL is a water well driller licensed for both plumbing and electrical, so I have a handy local resource for information and assistance.



(I was focused more on the $2k worth of tree removal in the above photo, but it shows the house well too)

Last edited by Brian_M; 07-31-2014 at 02:05 PM..
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Old 08-02-2014, 08:36 AM
 
Location: Barrington
63,919 posts, read 46,468,992 times
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Quote:
Originally Posted by EngGirl View Post
They are crazy. Back in 2012 we witnessed bidding wars for homepath properties. Not any more. We see houses sitting on the market way overpriced for 3-4 months as of now with no interest. I must add most homepath properties are full of construction defects. So their new program aka lets hide all issues should be a warning for buyers.

Most homepath houses in my area are at 2006 price level!!!
There are tens of thousands of local real estate markets in the US. How FNMA positions in one market is not necessarily how they position 10 miles away.
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Old 08-02-2014, 10:33 PM
 
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Originally Posted by middle-aged mom View Post
There are tens of thousands of local real estate markets in the US. How FNMA positions in one market is not necessarily how they position 10 miles away.
did you missed "my area" in my post?
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