“First Look Initiative” Gives Homebuyers a Competitive Edge on Foreclosed Properties

Fannie Mae has introduced a program that now gives homeowners a leg up when bidding on foreclosed properties in its portfolio.

In the past year, there’s been stiff competition on the lower end of the DC housing market, mainly fueled by bank-owned properties. These homes are often located in desirable neighborhoods but are either shells or need work to become livable. They are usually priced aggressively to sell fast. As such, the homes garner a lot of interest from investors, and it’s not unusual for these listings to receive several contracts within the first few days of being listed. In the bidding wars that ensue, traditional home purchase contracts with finance and appraisal contingencies lose out to all-cash, no-contingency contracts from investors. Often, a bank will go with cash buyers even at a significantly lower purchase price because the chances of the contract falling through are far less and the required closing period is shorter. This trend has been the cause of major frustration among homebuyers.

Fannie Mae’s new “First Look” initiative is one of several that help provide some balance to the homebuying process. As part of the Neighborhood Stabilization Program (NSP), the initiative is targeted at owner-occupants and buyers using public funds.“First Look provides owner-occupants and public entities that are committed to the community get an early opportunity to purchase one of Fannie Mae’s Real Estate Owned properties,” says Terry Edwards, Executive Vice President for Credit Portfolio Management at Fannie Mae. “As a result, we believe First Look will help us make progress toward stabilizing neighborhoods and building stronger communities in this difficult market.”

The First Look initiative only allows offers from owner-occupants and buyers using public funds to be considered for the first 15 days that a Fannie Mae-owned home is listed. In investor-saturated markets such as DC, this greatly reduces the competition when bidding for a home, giving homebuyers a better chance at getting their offer accepted. Buyers must act fast though, because after the initial 15 days of being listed, offers from investors may be considered.

In addition to the First Look initiative, buyers using NSP funds may also qualify for several other benefits, including deposit waiver, ability to renegotiate the sales contract after an NSP-required appraisal, and extra time (up to 45 days) for closing. A list of Fannie Mae-owned properties for sale in the DC area can be found here.

by Tim Brown

http://dc.urbanturf.com/articles/blog/fannie_maes_first_look_initiative_gives_homebuyers_a_competitive_edge/1630