First, I have to admit that I don't really know how Fannie Mae decides the listing price when they bring a foreclosure to market. My guess is the price is decided by the same folks who are tasked with working through a great deal of inventory in very little time without ever laying eyes on the property. The result, however it occurs, is that Fannie seems to be pricing their properties about six months behind the market.
My client was a single young lady looking for her first home. Finding something she could afford was proving to be difficult. You see, the listing prices at the low end of the Ocean City real estate market had been moving higher through the spring and summer months. As the lower priced homes sold we were just not seeing new listings to replace them. Without lower priced competition, the new listings we did see were being priced higher. Except for, you guessed it, Fannie Mae foreclosures. Their properties appeared to be priced based on market conditions from earlier in the year.
My client and I visited new foreclosure listings as soon as they came on the market. We looked at a property that was in excellent condition and she made a quick decision. We submitted a carefully prepared (if you have ever worked with Fannie Mae you know what I mean) offer. Within a week she had a signed contract and the rest is history.
In this case the foreclosed property had a sister property two blocks away that was also on the market. The houses were of identical design, constructed by the same builder, and built at the same time. The closing price on the sister property was thirty five percent higher than my client's purchase price.
The key in this case was being able to act quickly when Fannie Mae could not. The result was a happy, young client with equity in her first home.
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