FHA Guidelines are making it hard to keep deals together

By
Real Estate Agent with Johnson Real Estate, Inc. RES.0761759

There have been a lot of changes in the FHA guidelines, and I just came across another one.  Recently a listing of mine went under deposit, with the buyer going FHA.

Everything was going smoothly... maybe that should have been a signal right there.  The appraisal was done, and the good news is that the property appraised.  That didn't surprise me I knew it would.  What did surprise me is that in order for the loan to go through, the property which has well water, needs to be connected to the city water on the street.

The buyer does NOT want city water, he has been looking for a place with well water.

cromwell real estate agent, middlesex county ct

Also, by doing this it would be a hardship for my client.. as well as the potential buyer.. which I just found out.

I'm hoping that the cost to have this done will be more than the 3% of the selling price.  Guess what I'll be doing today?   If cost is higher, and along with hardship letters, it will not have to be done.

My question is why, if the buyer WANTS well water (which has been tested and is fine) why does the government have to step in and say otherwise?  Has anyone else run into this?

 

AS AN UPDATE... WE HAVE GOTTEN QUOTES IN ON CONNECTING THE WATER FROM THE OTHER SIDE OF THE STREET TO THE HOME.  THE COST IS WELL OVER THE 3% OF THE SELLING PRICE, SO WITH A FEW MORE STEPS FROM BOTH BUYER AND SELLER, HOPEFULLY THIS WILL BE CONCLUDED.

 

FOR ACCURATE INFORMATION ON REAL ESTATE... CONTACT YOUR LOCAL AGENT 

 

Info about the author:

Valerie Osterhoudt is a Cromwell Connecticut Residential Realtor who can assist you with the purchase and/or sale of real estate in the Middlesex County of CT, which includes Cromwell, Rocky Hill, Berlin, Middletown, Wethersfield, Newington, as well as all other surrounding areas.  Please visit me at www.CTrealtorMLS.com for all your relocation and/or local needs.  

For real estate.. all you need to know, is VALERIEO  

If you're thinking about buying a home in Cromwell CT area, there are plenty of great buys in today's market.  There is no better time than now to take advantage of these homes while interest rates remain at an all time low.  For more information on Cromwell CT real estate's homes and/or condos please visit Johnson Real Estate to access the newest listings.

 Valerie Osterhoudt, ABR - Johnson Real Estate, Inc. - 860.883.8889 cell - ValerieOhomes4u@gmail.com

 Copyright © 2011 - By Valerie Osterhoudt, ABR - All rights reserved...... *** FHA Guidelines are making it hard to keep deals together***

Posted by

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Valerie Osterhoudt, ABR
(Accredited Buyers Representative)

Is a Full Time Realtor® with with Johnson Real Estate, in Cromwell, CT who specializes in Homes and Condos For Sale in the Middlesex and Hartford Counties in CT.

VALERIE OSTERHOUDT REALTOR IN CROMWELL CT

valerie osterhoudt

Valerie Osterhoudt, ABR ~Johnson Real Estate, Inc.
cell:  860.883.8889

email: Valerie Osterhoudt, ABR

website: www.CTrealtorMLS.com

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Dana Devine 04/04/2011 06:10 AM
Topic:
Home Selling
Groups:
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Tags:
fha loans
fha guidelines
homes with well water
selling a home with well water

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Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Joy.. The only option I see to avoid this going forward is if a buyer comes in with a conventional loan.  Otherwise this will have to be addressed...even with a USDA loan.  See Fred's comment right above yours.

Apr 02, 2011 06:15 AM #139
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Christine.. If the price to have city water installed is more than 3% of the purchase price, it is cost prohibitive if the buyer and seller are in a hardship situation.

Apr 02, 2011 06:16 AM #140
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Sharon.. I'm sure you've read from a lot of the other comments here that if it is a rural area, and if there isn't any water or sewer lines in the street, the homes (obviously) can not be connected to it.

This is one of the many reasons why I *love* ActiveRain... you learn so much here.

Apr 02, 2011 06:21 AM #141
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Pamela.. I'm glad this blog helped you out.  This way if you run across this in the future with a prospective client, you will have the knowledge to move them in the right direction.

Apr 02, 2011 06:22 AM #142
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Fernando.. I'm glad you don't have to worry about this issue.  But do you every worry about what IS in the city water we drink?

Apr 02, 2011 06:23 AM #143
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Larry.. This is a very well written comment you left.. Thank you.  However, I have a different opinion (personally) when it comes to city verses well water.  I'll take well water (as long as it has been tested and IS potable) hands down over city water.  I can't stand the smell or the taste of the city water.  I had it tested, it was fine... but YUCK!  I won't drink it.  See comment made #7.  That is what I smell.  Well water, if tested does NOT have this.

I grew up with well water.. I'll take that any day over city water.

Apr 02, 2011 06:27 AM #144
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Carl, I don't have the septic issue in THIS case.  I did a few years back... what a nightmare.  Hope I don't have to go through that again.

Apr 02, 2011 06:29 AM #145
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Lyn.. That is the FIRST I've heard of where the garage door has to be functional for the buyer to get the loan.  Nothing in life is perfect, why do the *LITTLE* things have to be such a huge issue nowadays?

Apr 02, 2011 06:30 AM #146
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Melinda... I *really* appreciate Fred's (#82 & 85) insight and knowledge he brought forth.  Should the appraiser pull a field/street card from the town hall, they will see if the property has a well, septic, easements, etc.    Let's hope that the Realtor also do this... other wise you are not properly representing your client.

Apr 02, 2011 07:22 AM #147
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Andrea... ActiveRain is the BEST place to keep up-to-date on changes in real estate.  I knew about those FHA changes that you listed too.  These changes, if I recall went into place as of December of last year.

Apr 02, 2011 07:26 AM #148
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Patricia.. See you are a *relatively* new member here on ActiveRain, you will learn alot about changes and things to expect going forward.  This will not surprise you if it comes up on a property with your client.

Apr 02, 2011 07:27 AM #149
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Jeff, this was brought up to my client (the owner) when I did the CMA on the property.  However, my client did not want to get it done unless they HAD to.  If a buyer came in with a conventional mortgage and wanted the well, as long as it tested ok (potable) this would have been an expense she would not have had to incur.

Apr 02, 2011 07:29 AM #150
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Evelyn.. You had a very astute loan officer.  Glad they picked up on that for your client.  In this case the buyer (no my client) wanted the well water which is why they put in the offer.  I don't think they checked with their mortgage consult about all the loops/hoops when it comes to going FHA verses conventional.

Apr 02, 2011 07:36 AM #151
Rainmaker
597,884
Valerie Osterhoudt
Johnson Real Estate, Inc. - Cromwell, CT
ABR, Cromwell, CT Real Estate ~ 860.883.8889

Gene.. From all the comments I have read, I see this same thing.  Lenders are just protecting themselves.  Too bad we have become a SUE happy country.

Apr 02, 2011 07:37 AM #152
Rainer
9,933
Michael Dolezal
Main Street Properties - Pensacola, FL
REALTOR, Pensacola, FL

Hi Valerie,   Thanks for the post.   I don't like much government intervention and would support the well, especially if in a rural setting.   Hope this works out for you.

Apr 02, 2011 03:49 PM #153
Ambassador
749,535
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Valerie.... I am confused... in your comment to me, comment #150, you stated that this issue was brought up to your client who owns the house, who is selling it. I am talking about bringing this up to those that are trying to buy it. To put it in the description part when listing the house. thanks

jeff belonger

Apr 03, 2011 02:33 AM #154
Rainmaker
394,850
Elizabeth Cooper-Golden
Huntsville Alabama Real Estate, (@ Homes Realty Group) - Huntsville, AL
Huntsville AL MLS

IF we are asking the Government to insure the loan, they have all rights to require certain standards, really.  I know it makes it tough on all of us BUT...they are insuring it.  I've read so many "Government stepping in, stay out of our business, etc" comments.  If it weren't FOR FHA, they wouldn't be purchasing many times.  I hope I'm making sense, lol.  I am not wild about all of the restrictions either, however, I do love the loan product.  So, we deal with it :)  ugh!

 

Apr 03, 2011 06:38 AM #155
Rainer
86,636
Catherine Marrone
Integrity Residential Brokerage LLC - West Newbury, MA
West Newbury MA real estate, Essex County

I didn't realize this was a requirement so thank you for bringing it to our attention. Personally, I've had both a private well and public water in various homes.  I MUCH prefer having a private well and would get off of public water in a heart beat.  If the water tests OK, what's the problem and why are they requiring the hookup? Doesn't make sense.

Apr 05, 2011 02:40 AM #156
Rainer
106,947
Jan Stevens
Coldwell Banker Pittsburgh - Cranberry Township, PA

Yes, I ran into this for the first time very recently. In order to get it approved we had to document that the cost would be over 3% of the sale price (in this case it could have been 25% and very definitely a deal-breaker!!!). It was a complete surprise. The well had already passed every test we could give it.

Apr 06, 2011 07:09 AM #157
Rainer
135,632
Matt Robinson
Professional Investors Guild - Pensacola, FL
www.professionalinvestorsguild.com

Yeah, FHA short sale approvals are also making it hard to keep deals together.  They only allow a 1% seller concession, and that only if it's an FHA loan that the end buyer is using.  Don't they realize that FHA loans were primarily written for 1st time buyers in price ranges where today's buyer normally needs closing costs assistance. 

Oct 21, 2011 05:28 AM #158
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Rainmaker
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Valerie Osterhoudt

ABR, Cromwell, CT Real Estate ~ 860.883.8889
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