When a Realtor seeks out homes we should know what kind of loan product our clients will need and perform due diligence. Some sloppy Realtors either don't know about the condition of their homes, which is a ignoring fiduciary responsibility or just dishonest. Some might say that Realtors are just marketing widely or the buyer will pay for the repairs, but that's a cop-out IMHO.
Why? Because a buyer has no business paying for or being financially accountable for repairs. If the deal dies, who's left with the bill and who gets a repaired home and profiting by it? Not a good buyer outcome at all.
I thought I'd take a moment to share my story and provide information about what buyers should know with respect to their loan type.
I am helping a client with down payment assistance from the city that requires the house must be FHA ready at the time the contract is written.
Being the diligent Realtor that I am, I called the listing agents to verify the home condition with respect to their proposed financing terms - FHA. I specifically said, "No structural issues, no electrical or plumbing issues." Four were honest so I set up six appointments to discover only 2 didn't cause us to roll out the back door.
After client frustration and discouragement I assured her that I would be more diligent about verifying. I called on 12 more saying, "Please be honest with me. My client is terribly disappointed that we can't find homes that meet this criteria and I don't want to waste her time or disappoint her any further." I continued with, "If you think it might have foundation, moisture, electrical, or plumbing issues, please be professional and honest" Kudos to about 7 who said "There may be issues."
We went out to see the other 5 and guess what!?! Five Realtors were not professional nor honest. One didn't even notice that a room was slipping off the side of the house and we could see the sky and ground. The owner was home and gave us an explanation about repairs she was willing to do. She said, "Oh, don't worry about the dry wall, we'll fix it." Me, astounded by her response kindly said, "It's not the dry wall I'm concerned about, it's the foundation." Lady - "Oh, my Realtor has seen it and doesn't think it's a problem." Gasp.
So what conditions are there to FHA, VA, TX Vet, Conventional, Cash, or Owner Carry?
1. VA & TX Vet are the most stringent of all lender requirements. It means the house can't have any termites, rodents, electrical, plumbing, foundation, roofing, or structural issues. The house must have GFCI outlets in the bathrooms & kitchen.
2. FHA has the same requirements but seem to bee more generous on a subjective basis.
3. TX Vet aka Texas Veteran's Land Board offers to Texas Residents to buy the loan from the VA and offer a discounted interest rate. It must meet VA standards.
4. Conventional - Roof, foundation, structure must be in tact. No "safety hazards" - very wide open interpretation.
5. If it says "Cash or Owner Carry" - Buyer beware. No inspections or appraisals are required resulting in the highest risk level for a consumer. Not recommended other than by investors.
Your best bet is to find a Realtor who will be professional and consult you on condition issues.