“I’ve been told that banks prefer to sell their foreclosures to owner occupant buyers. Is that true and why? I’m strictly an investor, so what’s the downside of just saying I’m going to live in the property?”
That’s a lot of questions. I’ll answer them one at a time:
1. Do banks prefer to sell their foreclosures to owner-occupants?
A few do, but most don’t seem to have a preference. However, Fannie Mae and Freddie Mac have a stated policy that they prefer to sell to owner-occupants.
2. Why do some prefer to sell to owner-occupants?
Some banks feel owner-occupant buyers are more likely to stick with a home during escrow and actually close. For Fannie and Freddie, it’s more of a “public policy” goal to promote neighborhood stability by having owner-occupants over renters. I’ve actually seen them sell for LESS money to an owner-occupant.
3. Why shouldn’t an investor just say they’re going to owner-occupy when the make an offer?
First, obviously it’s lying. Second, it may be fraud. Third, Fannie and Freddie make buyers sign a form certifying that they intend to live in the property and spelling out dollar penalties if they’re caught lying and not living there for a minimum period.