Are You Doing Right By Your Buyer??

Real Estate Agent with Shahar Management

Recently my partner and I have listed a property for sale that has a cesspool instead of a newer septic or municipal sewer.  In our area that is not uncommon since certain areas have much older and historic homes.  Multiple buyers have loved the home when viewed with their Realtor.   When you receive this type of feedback this is exactly what you are looking for as a seller and as a listing agent. 

Next of course would be discussion of an offer which has been nipped in the bud because of nervousness over the cesspool and the claim that "FHA doesn't lend for properties with cesspools." 

I have never found this to be the case, but wanted to clear this up once and for all, for the seller and for future reference as there are many homes in the Hudson Valley that still have cesspools. 



If sewer systems are not connected to public systems the septic system must meet the requirements of the local health authority with jurisdiction.   If the local authority does not have specific requirements, the maximum contaminant levels established by the EPA will apply.


In checking the FHA guidlines there is nothing that says they will not be covered.  I went one step further and had a loan officer friend speak directly to underwriting and this is what I was told:

Are You Doing Right By Your Buyer - CesspoolsProperties that cannot connect to a public system and are served by an individual sewage system that is acceptable to the local health authority, the system is then acceptable to HUD/FHA. This includes numerous types of sewage systems including cesspools, individual pit privies (out houses), and mound systems.  Individual sewage system inspections are only required if there is evidence of system failure, if mandated by state or local jurisdiction, if customary to the area, or at lender's discretion.

In those instances, the appraiser is to condition for an inspection by the local health authority, a licensed sanitarian or an individual determined to be qualified by the DE Underwriter and a certification that the system is operating satisfactorily.  If the subject property water source is a well, the cesspool must be 100 feet from the well.


Having said all that, Investors do have their own overlays, and the Investor (not FHA) may choose to not accept a mortgage on a property that is serviced by a cesspool, so your Buyers should check with whom they are getting their mortgage through to make sure that Lender does not have an overlay that would prevent them from doing the mortgage.  If that Lender does not allow for properties with a cesspool, then they may have to contact another Lender that does, since FHA will insure properties with cesspools.

In at least one of these cases the Realtor said "I always deal with this lender."  If your buyer loves this house I ask again - ARE YOU DOING RIGHT BY YOUR BUYER?

Posted by






Debbie Walsh, GRI, CNE, CHMS, REM | Office (845) 283-3036 |

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If you are Buying, Selling or Relocating to the Hudson Valley area and need help from a professional REALTOR®, I would be happy to assist you! Please visit my Hudson Valley website for property searches and to sign up for free listing alerts and other information.


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WINNER 2015, 2016 & 2017 Hudson
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Comments (47)

Michelle Francis
Tim Francis Realty LLC - Atlanta, GA
Realtor, Buckhead Atlanta Homes for Sale & Lease


Understanding an issue that may be a challenge for your buyer is critical.  How you deal with it is even more so.  It may not work for some buyers, but what options are there. Limiting your clients to one mortgage group is not the best plan, as life is never that simple that one group will handle all lending situations well.  They just rarely do.

All the best, Michelle

May 29, 2013 11:20 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

This is a question I have had and thanks for the information on cesspools and lender requirements.  It can be very challending for both buyers and seller.

May 29, 2013 12:38 PM
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad
That should have multiple vendors for all aspects of the real estate business. The lack of experience bubbling to the surface in this market is starting to amaze me. Good for you checking and verifing this for potential buyers and your sellers. Also for putting the home on the open market to get the best offers for he seller.
May 29, 2013 02:30 PM
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

Stinking subject but one that needs to be dealt with, like other features that were typical, safe, the norm in an older property structure that was around before the rules. The inspector, appraiser can raise as many red flags as he wants beyond the must haves too.

May 29, 2013 08:19 PM
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Nina - Agreed - thanks for commenting!

Kerry - Time will tell!

Than - You could be right!

Denise - Great point Denise!

Mike - Right!

Dena - Thanks for reading!

CJ - Thanks for commenting!

Brenda - I am surprised by how many are saying this. 

Michelle - Thanks Michelle!

Joan - Just one more hump to hurdle!

Mike - In a strong buyer's market you have to do whatever you can.

Andrew - Of course.

May 29, 2013 09:44 PM
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Good example of an agent that doesn't know her stuff or a good loan officer that knows their stuff. 

May 30, 2013 12:33 AM
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

Debra, thanks for the post. good information

May 30, 2013 12:35 AM
Michael J. O'Connor
Diamond Ridge Realty - Corona, CA
Eastvale - 951-847-4883

Glad to know that you won't "Waste" anyone's time here!  ;-)

May 30, 2013 12:42 AM
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

This is a new one on me - at first I thought by 'cesspool' you meant a septic system that wasn't working properly. You've provided important info for local homebuyers. 

May 30, 2013 12:45 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Debra, I have only gotten involved with one property that had a cesspool and it needed to be changed to an engineered system as the pool discharged into wetlands, which was not acceptable to anybody

May 30, 2013 01:21 AM
Deborah L. Kessler
Hawaii Life Real Estate Brokers - Kapaa, HI
Kauai Broker

Here in Hawaii we have mostly cesspools. We never have a problem with lenders approval due to the existance of a cesspool. What makes many mainland buyers run the other way from a home with one is their "gasp" when they learn there is a cesspool. Buyers don't understand them and think of them as antiquated and bound to fail. Not true.

May 30, 2013 03:16 AM
Dana Hollish Hill
Hollish Hill Group, JPAR Stellar Living - Bethesda, MD
REALTOR * Broker * Coach

Thanks for the info. I have not encountered cess pools yet, but know I will know where to begin when talking to my clients about financing. I honestly do not know what a cess pool really is, but I'm looking into it now.

May 30, 2013 03:33 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Yuk! We have to deal with some septics but no cesspools. 

May 30, 2013 03:57 AM
Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

I have never had trouble getting a mortgage accepted for a property with cesspools.

May 30, 2013 12:31 PM
Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: / cell: 334-494-7846

Wow - there is a lotta rural property in my area, but I haven't run across a cesspool....or outhouse.....yet! But am now knowledgeable when I do. Thanks!

May 30, 2013 12:48 PM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Thankfully, this isn't an issue in our area but thanks for your information.

May 30, 2013 03:45 PM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker
And sometimes the cesspool has to be drained to pass inspection. And leach fields can be a problem during the rainy season. I dealt with all of these in Del Norte County CA. And,yes, wells need to be tested for flow and contaminants.
May 31, 2013 04:05 AM
Bob Miller
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Debra, great info, but thankfully we don't have them in our area.

Jun 02, 2013 08:19 PM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I have never faced this issue before.  But sounds like you know the issue good.  However, no matter what you say some of these lenders will not listen.

Jun 03, 2013 03:48 AM
Debbie Walsh
Shahar Management - Middletown, NY
Hudson Valley NY Real Estate 845.283-3036

Thanks everyone for your comments and for taking the time to read!

Jun 03, 2013 03:56 AM