It Won't Go FHA!

Tni, you're in luck, my new batch of t-shirts are in:  "Make Your Day, Go FHA!"

Brian

Weak sellers agents make for poor sellers.

Having a good loan agent is a good start.   FHA allows "as is" property sales subject to health and safety codes.  The guidelines are constantly changing and will continue to  do so.  There are some good FHA programs for rehab available.

Tni, I had one of my listings go under deposit last week, inspections already done. No real issues, my client has actually fixed everything already. But during the conversation the buyers agent mentioned this was an FHA loan, which was news to me!

I would not have done anything differently, however I do wish I would have known as I could have passed it on to my clients right away. Because IF something had come up in the inspections that would be an FHA headache I would not have appeared incompetent.

HOWEVER, having said that... it just seems to depend on who reads the inspection reports. I have seen identical issues pass on one house and become a huge issue on others! Go figure...

Oh, I feel my fingers a'twitchin... my brain a'brewin.... a post must be coming on!

Tni- You give great examples, of wht thinking through the obstacle is so important. As is vs As repaired value. Lenders can see if you provide the correct information that the return on their repair investment far outweights an As-Is sale projected price. 

Hi Tni - Ignorance to FHA requirements is a real problem.  Agents need to understand the process.  Danell who is an FHA appraiser makes it clear that the rumors of what FHA wants are untrue.

Another great one, Tni!   This has been going on for years, the idea that an FHA or VA appraiser will deny value over repairs or missing appliances.  A VA appraiser told me they dont care if appliances are missing, you can live in a home without a stove.  But every agent will tell you that there will be an issue. Big negative falsehood we need to quit spreading.

Tni~ Thank you for that clear, albeit unfortunate, blog for sellers, appraisers, inspectors, and agents alike. 

Tni -- knowing the requirements of FHA(I admit they seem to change)is important for a Realtor to inform their client whether they be a seller or buyer.  

Tni,  Hate to say this, but more often that not it is an inexperienced agent (listing or selling) who makes the proclamation that the property will "NOT go FHA".  I also find that a sellers reluctance to accept an offer, any offer (FHA, VA, 203K, USDA, etc) has a direct correlation to the knowledge of the listing agent presenting the offer.  Ignorance breeds rejection.

Love your comment to Andrea.  "It can be handled."  Unfortunately, both agents and MLO's are often times more focused on the challenge than the solution.  Said peeps bring a lot of drama to the party.

I had one deal that was FHA with Los angeles City downpayment assistance. There were significan repairs to be done but both the city and the FHA agreed that this could be done after purchase. The condition was that the City assistance would hold the money for the repairs and disburse them to contractors after closing. The borrower of course had less money for pre-repair price but he could buy an as is home.

HUD made a lot to changes to appraisals in Mortgagee Letter 2005 ML-48.  The letter states that "FHA Rosters Appraisers are reminded to report all readily observable property deficiencies."  Only the items that represent a risk to health or safety or the soundness of the property require automatic repair. 

Many REO sellers are in fact willing to make FHA required repairs.

Tni, Although everyone has good answers...as a former appraiser I like Danell's answer that the "home is in FHA condition" or that it "could go FHA".

Good morning, Tni. As noted, the key is to understand what repairs the FHA appraiser will require (if any) and who will pay for them.

(And I want one of Brian’s T-shirts, too!)

Tni, I had my handy man make some minor repairs on a reo just so my buyers could get their FHA loan approved.  Now I'm sure it was probably not the best scenario to repair a home that my clients didn't own but sometimes you have to take a calculated risk.