News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CRSA, CSP, GRI, ePRO®,REALTOR ®, RealtySouth
The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.
Fannie Mae Offers New Incentives…
Yes the Tax Credits are gone (except for returning vets*) but in an effort to move its huge inventory of “re-claimed” properties, Fannie Mae announced new incentives for buyers and selling agents of its homes.
As of Fannie Mae’s latest quarterly report (June 30, 2010), Fannie was holding a burgeoning inventory of 129,310 properties.
In an effort to right the ship, Fannie is offering the following incentives to Buyers of their homes and to the agents selling the homes:
Qualified homebuyers who will be owner-occupants can receive up to 3.5 percent of the final sales price that can be used toward closing cost assistance, including a home warranty, if available. In addition, selling agents representing owner-occupants will receive a $1,500 bonus.
To qualify for these incentives, eligible offers must be submitted on or after September 23, 2010, and must close by December 31, 2010. The sale must close within 60 days of the offer being accepted.
For a list of eligible properties visit Fannie’s REO website, HomePath.com.
HomePath properties are owned by Fannie Mae and include a wide selection of homes, including single-family homes, condominiums, and town houses. HomePath properties may also be eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing.
Now there will doubtless be a stream of critics of this program claiming that this is simply another government bailout or it will falsely create activity in the market place only to cause a period of inactivity thereafter. In truth, neither is true.
Fannie Mae, as a private company (although a recipient of government supports), is simply acting, as all sellers in this market must and do, to attract sellers. The fact of the matter is that there is absolutely nothing out of the ordinary about a seller paying up to 3.5% in closing costs for a purchaser in today’s market. As a matter of fact, I don’t think I’ve done more than three deals this year in the re-sales market that didn’t include sellers’ assistance for the purchasers’ closing costs and pre-paid items in an amount around the 2.5 – 3.5% arena. At the time of writing this, I have been unable to determine if Fannie will automatically include pre-paid items… but I know that we have negotiated them in the past.
Here’s the Real Story: Fannie is offering incentives to selling agents (those agents who bring a buyer to the table)… A $1500 bounty! They are trying to get agents to show their homes… to sell their homes over the competing properties. This too is not an unusual thing in today’s market.
In a market where so many agents are struggling for survival, this incentive can be a powerful inducement to hungry agents to steer buyers toward Fannie Mae properties. So my advice is don’t buy a home without representation… but interview your agent well… be sure that he/she is working for you! If you are working with an agent under a Buyer’s Agreement that agent is required by law to put your interest above the interest of all other parties, including their own!
May the Market be with you.
* Armed Services Veterans returning from Afghanistan and Iraq have until April 30, 2011 to exercise the tax credit that expired for all others on April 30, 2010.
