Special offer

Can A Utility Pole Squash Loan Approval?

By
Real Estate Broker/Owner with Providence Group Realty TREC# 0608931

Working with an experienced Buyer's Agent is worth it's weight in gold. Not only are Buyer Agent services free to a Buyer, their professional services can save a buyer time and money by helping to avoid costly buying mistakes.

Last week, our office began searching for a first-time home buyer in Dallas, TX. This Client plans to use FHA financing, and is both pre-approved and eager to find her perfect home match.

FHA is more stringent than other loan types
when it comes to qualifying property condition. 

The home pictured below was advertised by a local listing broker as being compatible with FHA financing types, and the listing photos used in the MLS were carefully angled to exclude visibility of the power lines running along the adjacent street. Our Buyer selected it from her search matches and requested a showing.

Before showing, we vetted the listing by previewing aerial and street-view imagery. Experience told us the pole might be an issue, so we sent screen shots of the street view out to our Buyer's lender, as well as several other our preferred lender partners, for consultation and opinions.

The jury was out. FHA underwriting requirements carefully guard purchasers against safety and nuisance hazards, to protect both Buyer and property values. The street view didn't provide us with enough perspective to assess what might be called out by and FHA appraiser.

While the property was adorable, our showing gave us the opportunity to snap a photo from the back yard, to better illustrate the actual proximity to the utility pole.

Physically, the pole was not "on the subject property", but it was easy to see that if it were to fall, the proximity did indeed potentially pose a safety risk to the structure & occupants.

The verdict: this home was not going to be the FHA-friendly property we hoped it might be.

Hindsight is 20/20

Anticipating roadblocks and potential threats is one of the many gifts a seasoned Buyer's Agent brings to their clients.

One of the worst buying experiences a home buyer can encounter is to set their hearts and minds on a particular property, navigate through getting a home under contract, spend hundreds on inspections, pay for an appraisal, and THEN learn that a property won't qualify for their selected financing type. Not on our watch, folks!


Need help finding your perfect home match in the Dallas / Fort Worth area? Our seasoned Buyer's Agents at Providence Group Realty are strategically positioned around the Metroplex to serve with local market expertise. Call us at 469.645.6363 and let us help you find your dream home today!

Comments (7)

David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

That is amazing, never heard that a normal street electric pole would cause such a problem. If it was such a danger then I am sure the utility company would re-enforce it.

Dec 05, 2015 03:59 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

So - does that mean that all FHA homes now have to have underground power? Why would they assume that the pole will fall? 

My son is a foreman working for a powerline building company, and among other things, he is often called upon to replace aging poles or the transformers on those poles. They quite often have to enter the homeowner's property to do so. Does that mean all of those homes could not be financed through FHA? 

This is interesting - and I wonder if it is a new regulation. 

Dec 05, 2015 04:07 AM
Amanda Thomas

Hi Marte Cliff, what we understand is that FHA makes exceptions for certain types of utility poles (those that "collapse" instead of fall), and the pole isn't considered a hazard if falling in any given direction doesn't place it on the subject property.  (If it can squash the house, it can sqaush loan approval.) This is a case by case judgement. Being aware of underwriting guidelines should prompt investigation prior to getting under contract. :-)

Dec 05, 2015 04:12 AM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

That is a new one....wonder if thisis a written quideline or the opinio of oee FHA appraiser as the utilities here have lots of information refuting any dangers.

Dec 05, 2015 05:58 AM
Amanda Thomas

Hi Sally K. & David L. Hanson, see http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_POLI_APPR_PROP.pdf.  Section 3.c.v refers to Overhead Electric Power Transmission and Distribution Lines where the power line and tower guideline is referenced.

Dec 05, 2015 06:11 AM
David Gibson CNE, 719-304-4684 ~ Colorado Springs Relocation
Colorado Real Estate Advisers LLC - Colorado Springs, CO
Relocation, Luxury & Lifestyle residential

Amanda,
And the chances of that pole falling over are one in a _____ . There are much more tangible risks to that house than that pole.

Dec 05, 2015 11:49 AM
Amanda Thomas

David Gibson, agreed. Unfortunately, our agreement isn't the magic wand that will change the stoplight to green for underwriting.  The exceptions they do make are for poles that are engineered to "collapse".    

Dec 05, 2015 10:09 PM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Amanda - Great job doing your due diligence on this one. FHA loans can be tricky sometimes, and you discovered early on that this home would, unfortunately, not qualify.

Dec 05, 2015 12:05 PM
Amanda Thomas

Troy Erickson, thank you so much for your comment, and the gift of readership & understanding. You make us feel connected. :-) 

Dec 05, 2015 10:13 PM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Amanda.  Very interesting.  I wasn't aware that this could be an issue with FHA financing.  Thanks for the education.

Dec 07, 2015 07:18 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Just emailed this to a client of mine and am clicking on this to help get it FEATURED ! Thanks !

Dec 08, 2015 11:18 PM
Amanda Thomas

Thank you so much, Michael J. Perry. Your compliment made my day! <3  

Dec 08, 2015 11:30 PM