Are all the FHA buyers being left behind?

YES! Currently, there are willing and able purchasers in the Northern Virginia housing market who are being left behind...the FHA purchasers.

A colleague of mine, despite having written twenty-eight contracts for her purchaser, has been continually beaten out by cash and conventional purchasers-but not because her offer is lower. Instead, the stigma of the FHA loan is at play here-the idea that FHA appraisers are too conservative, or that FHA purchasers are not as qualified, or even the notion that an FHA loan takes longer to process, all of which are patently untrue.

The fact is, most conventional appraisers are FHA appraisers as well and it is my experience that they look at the property through the same eyes. While the guidelines pertaining to the property's condition may be different, the comparables used would be the same. Better yet, by working with a good loan officer, you can close an FHA loan in 30 days or fewer. Choosing an FHA loan in this economic climate just makes more sense, especially when you consider the low down payment and interest rates associated with FHA.

 Many of my clients choose FHA because many of the homes they are looking at need cosmetic work, and an FHA loan allows my clients the opportunity to conserve their cash for carpet, paint, and appliances, among other costs. Of course, all of those properties are REOs at rock bottom prices that are drawing multiple offers and now my clients just can't compete. I have recently seen listings that are in perfectly good condition but which specify "no FHA" in the listing remarks. As long as it is not a flip, then an FHA loan is perfectly fine. To remedy this, I have started calling the listing agents to ask if they have cash offers so I can just cross the showing off my list. This is unfortunate and frustrating for many first time homebuyers. My proposed solution is that if the purchaser qualifies for a conventional loan, we allow him/her to write up the offer as conventional and switch after ratification (if the contract allows it), go conventional, or simply put the biggest earnest money deposit down so that the seller knows that the buyer is serious. Buyer agents should also consider representing his or her buyers in purchasing a home at auction.

And a reminder to all traditional sellers:

Opportunity is knocking-there are tons of FHA buyers who will scramble for a chance to buy your property.