HomeSteps Program Showed Me Its True Colors Today
In case you haven't heard lately, the subject of the incompetence of Freddie Mac is appearing in more and more blogs, periodicals, and national news media outlets everyday. Just last week, Freddie Mac announced that they lost $4.7 BILLION in the 2nd Quarter/2010. As expected, on August 9th, they came out with the following press release:
The Federal Housing Finance Agency (FHFA), as Conservator, will submit a request on the company’s behalf to Treasury for a draw of $1.8 billion under the Senior Preferred Stock Purchase Agreement (Purchase Agreement).
Yes, that would be $1.8 BILLION of OUR TAXPAYER DOLLARS that they are requesting. Nothing like rewarding Freddie Mac incompetence! Does anyone notice a trend yet?
Unfortunately, we, as citzens, are becoming numb to these types of announcements (myself included). Hell, what's another $1.8 BILLION? The HomeSteps program showed me its true colors today.
On Wednesday, I showed a client a Homesteps home. It was competitively priced for the neighborhood, and had been on the market for 35 days.
My client loved the home, and wanted to write an offer. I pulled the comps/history, and noticed that the home was previously listed as a short sale. It languished on the market for 339 days, had received several offers, and the listing agent listed it as having a "pre-approved price" from Freddie Mac of $165,000. Not surprisingly, nobody was willing to pay this price, and Freddie Mac got the house back on 6/1/2010.
Fast forward to Wednesday. I called the listing agent, and lo-and-behold, after being on the market for 35 days, she had just received two offers that day. Go figure! Armed with this knowledge, and having a good feel for the comps, my client decided to submit a full-price offer, WITH NO SELLER CONCESSIONS! I'm talking ZERO concessions from HomeSteps. No Home Warranty, no HOA transfer fees, NADA. The offer was at $139,900, and we had a pre-appoval letter from her lender, saying she was approved up to $200,000.
This was the cleanest offer they could ever expect to receive. Fearing our competition, we didn't even ask for the "free two year home warranty" that was being offered under the current Homesteps promotion.
I called the listing agent to confirm she had received it. She confirmed, and even went as far as to say that our offer was the "highest and best" offer, and we should hear something within 24-48 hours. This was a "slam-dunk", right?
Today, less than 48 hours later, I got the dreaded email that I never expected to receive...
Hello There,
Thank you again for your offer. This email is to inform you that the Seller has accepted another Buyer’s offer. In the event the current escrow should fall through I will contact you to see if your Buyer still has interest.
Please feel free to contact me with any questions.
Thank you!
Needless to say, I was in shock when I saw this email come up on my IPhone while attending a short sale training seminar. Not able to hold back, I immediately got up and went to the lobby to call the listing agent.
Doing my best to keep my cool, I started off by asking the listing agent if she made a mistake by sending me the email. She said, "I wouldn't have sent it to you if it weren't true".
"Well, you told me that you had submitted our offer as "highest and best" just two days ago. What happened?", I said.
"Oh, you must have misunderstood me. Every offer I submit is "highest and best". But, I'll check to see what's going on". (Pause 30 seconds....)
"You know what, this is weird. Freddie Mac accepted an offer that netted them less than your offer. They accepted offer came in higher than yours, but the other Buyer asked for 3.5% in Seller contributions, which resulted in a net price that was less than your offer".
"Weird"?, I said. "How does this happen?"
"Well, with this "summer promotion" that is going on, they (Freddie Mac negotiators) have explicit instructions that say they cannot take into account seller concessions when considering the "highest and best" offer. You should have offered more, and asked for the maximum of 3.5% seller concession".
I couldn't wait to get to my office and Google "HomeSteps Summer Promotion". In doing so, I found the following Freddie Mac press release from July 20th...
McLean, VA – People purchasing single family HomeSteps® homes as a primary residence will receive a comprehensive two-year home warranty paid for by Freddie Mac (NYSE:FRE) as part of HomeSteps' SmartBuy sales promotion. In addition, for a limited time, Freddie Mac will pay up to 3.5 percent of the sales price in buyer's closing costs, potentially saving qualified buyers of HomeSteps homes thousands of dollars in transaction costs.
HomeSteps' SmartBuy sales promotion began on July 17 and is scheduled to end on October 30, 2009. HomeSteps, the real estate sales unit of Freddie Mac, markets a nationwide selection of Freddie Mac-owned homes.
"This unprecedented offer will enable HomeSteps buyers to protect against unexpected repair costs which could interfere with their ability to meet their mortgage obligation," said Chris Bowden, Vice President of HomeSteps. "Combined with our offer to pay up to 3.5 percent of the sales price in buyer's closing costs, we believe HomeSteps homes will have a competitive edge at building buyer confidence and increasing sales for our affordable homes."
"We expect SmartBuy's comprehensive two-year warranty and closing cost offer to help more families buy and own HomeSteps homes, which in turn will help support home values and stabilize communities," said Ingrid Beckles, Senior Vice President, Default Asset Management at Freddie Mac. "Today's announcement shows another way Freddie Mac is addressing impacted markets to achieve the goals of the Obama Administration's economic recovery effort."
I would have like to have said I was dumbfounded, but realized that this was just yet another example of the incompetence of Freddie Mac in particular, and our government in general. I especially like that last line. :) HomeSteps is obviously a way to get homeowners into their homes with a government-endorsed handout. While I am growing sick and tired of handouts, it ticks me off even more when the handout is more than it could have been, in our case. So typical of what we are seeing on an everyday basis lately.
My Buyer wrote an offer that would have resulted in a higher net profit for Freddie Mac (yours and my tax dollars, by the way), and they chose to recoup less money because of their incompetence and nonchalant attitude for taxpayer dollars.
Wouldn't it be nice if a government program like HomeSteps actually gave a damn about re-couping taxpayer dollars? By the same token, wouldn't it be nice if our ENTIRE GOVERNMENT gave a damn? HomeSteps showed me its true colors today, and they weren't pretty.
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Bob Hertzog
Summit Home Consultants
Copyright © By Bob Hertzog 2010 *HomeSteps Program Showed Me Its True Colors Today*