fanfred There is no doubt, that you don’t have to look any further than the MLS to find good deals on investments homes. The Arizona Regional Listing Service (the listing database used by licensed Real Estate Agents) has thousands of bank listings and under priced short-sales. BPO agents do what they can to assess the true value of the property. But let’s face it, it takes years of experience to be able look at a distressed property and accurately estimate the cost of repairs. That particular skill is a mandatory for wholesaler or flippers. No so for the traditional real estate agent. As a result, the MLS offers many more buying opportunities for investors (at least those looking for a deal or ‘steal’) than in years past.

But before you grab your pick, mule, and pan to start mining the MLS for deals, beware that the cards are stacked against you if you’re an investor. Be prepared for an unlevel playing field even if you can buy with cash. Fanny Mae launched its First Look Initiative in November of 2009. Freddie Mac and HUD have also adopted similar initiatives. The initiative favors owner occupied buyers. The initiative stipulates that property must be must be on the market (MLS listed) for 15 days before investor offers are considered.

Unfair, right? Before you disagree, keep in mind that Fannie Mae and Freddie Mac are government funded outfits run with your tax money. It’s easy to understand their intention (neighborhood stabilization) but as with most government interventions, the implementation is fundamentally flawed. I have trouble describing it as anything other than discrimination and lack of free market principles. Regardless of your opinion, the initiative will be in effect for at least the next few years.

So what are the options for investors?

1) Lie about owner occupied status – Not a wise idea. During the purchase process you’ll be asked to sign a form stating that you’ll be fined Five Thousand Dollars to the seller as liquidated damages if you’ve falsely represented your Owner Occupied status. Btw, its fraud and even the Realtor making the offer are held accountable for knowing your Owner Occupied intentions.

2) Sit and wait for the 15 day hold period to end – Not an easy proposition for investors that are accustom to finding, inspecting and closing on a deal within days. However, the worse the property condition, the more likely it will still be on the market in 15 days. Very few people are willing to move into a home that has no kitchen, no bathrooms and smells like a port-a-john outside a Motley Crew concert.

3) Seek other means for purchasing properties – The 15 day period doesn’t affect the foreclosure auction process. The auction process doesn’t discriminate based on intended use.