When working with FHA buyers, it is essential that you and your buyer are aware of the FHA guidelines for lending. The same goes for a listing agent. When you put in the listing that you will accept FHA financing, you need to be aware, as well, of the most common repairs that could be expected.
A couple of years ago, I was representing a client who was using a FHA loan to purchase a home that was built early in the 1900's. The home had good bones, but was an inspector's nightmare when it came to the FHA guidelines. There ended up being a long list of FHA required repairs. To top it off, the seller was selling the home AS-IS. Making a long story short, the transaction closed on time with all of the FHA required repairs completed, but not without some strong negotiation on my part.
This instance is one of those where the listing agent should have been more aware of the FHA guidelines and had the seller make some (if not all) of these repairs prior to putting the home available to FHA.
Here is a list of the 12 most common FHA repairs from http://www.hud.gov/
- If the home was built prior to 1978, chipping, peeling paint must be scraped and painted. this includes interior, exterior, garages, sheds, fences, etc.
- Roof should have 2-3 years of useful life remaining and no more than 2 layers of shingles. If the home is over 10 years old, you must remove snow from a large portion of the roof for inspection by the appraiser.
- Broken windows should be replaced.
- The cause of Wet basements should be cured (i.e., improve drainage away from house, gutters, etc.).
- Electric service must be 60 amp or greater. Electric certification may be required if 60 amp appears to be overloaded (i.e., larger than 1000 sq. feet with many major electrical appliances).
- Abandoned inoperable wells must be capped and sealed by a licensed well sealing contractor.
- Safety handrails should be installed in open stairwells of three or more stairs.
- Infestation of any kind should be exterminated (i.e., insects, mice, bats, etc.).
- Damaged or inoperable plumbing, electric and heating systems should be repaired. The appraiser will check these areas.
- Structural or foundation problems must be repaired.
- Flammable storage tanks must be removed and filler cap sealed from the inside (i.e., buried oil tank).
- If there is a crawl space, it will be the homeowner's responsibility to make this area accessible so that it can be thoroughly inspected.