Home > Blogs > Arizona > Maricopa County > Gilbert > "No water in the swimming pool? No loan!" says FHA

Randy Hooker - Blogging Arizona

Greater Phoenix -- Chandler, Gilbert, Mesa & Queen Creek -- Arizona

By Randy Hooker | Broker in Phoenix, AZ

"No water in the swimming pool? No loan!" says FHA

I'm in the final stage of a transaction in which I'm the Buyer's Agent and the seller is Freddie Mac (bank owned single family detached house).  All inspections have been completed, appraised value is in, and by all appearances, we were good to go ~ until we received a letter from the buyer's lender.  Here are the key parts of the letter:

"The purpose of this letter is to address the empty pool at [referenced] property.  The buyers have applied and been approved for an FHA loan in order to purchase the property.  The credit approval part of this process has been finalized and is complete.

To obtain full and final approval and successfully close this transaction we need to obtain property approval.  Upon reviewing the appraisal it came to our attention that the pool is currently empty.  According to FHA guidelines, the pool must contain enough water to allow the pool's pump to successfully circulate the water.  The pool's current state will not allow us to move forward on this transaction at this point.

In order to approve the property, the pool must be filled with water to meet the above mentioned criteria for a period of time long enough for the appraiser to re-inspect the pool.  This is for 2 reasons. The first is to ensure that the pools systems are functioning. The second is that to ensure that the pool can hold water to avoid any safety issues."


Empty Pool

At this late stage in escrow, the questions raised by this letter are numerous and potentially devastating:

  1. Who is going to pay for the water to fill the pool?
  2. Is the FHA appraiser qualified to determine if the pool equipment is functioning properly?
  3. Who is going to pay for repairs to the pool equipment if it is not functioning properly?
  4. What are the implications for the seller if they refuse to cooperate and effect the pool filling and/or repairs?

Personally, I'm in favor of dropping a water hose in the pool, filling it up and calling the appraiser back to re-inspect as quickly as possible.  But the "what if" questions come into play, so who knows what's gonna happen!  Any thoughts?


Randy Hooker - Chandler, Gilbert, Mesa, Queen Creek, Arizona Real Estate


Gilbert Homes ~ Chandler Homes ~ Mesa Homes ~ Queen Creek Homes ~ Phoenix Homes


photo by Jono Rotten


By Vicky Chrisner,  Sat Apr 4 2009, 18:49
Not sure who you represent, but if you want this to settle, you don't have a choice. Fill the pool
By Howard Rose III,  Sat Apr 4 2009, 19:01
I agree, if you are the buyer's agent and loan officer says unless the pool if filled, we cannot proceed forward to close.............Fill the poll!
By Randy Hooker,  Sat Apr 4 2009, 19:04
I hear you guys... the issue is that the pool is in horrible condition, and definitely needs to be re-plastered. By filling it right now, all we're going to do is exacerbate the problem! And if we fill it now, and escrow doesn't close for another 2-3 weeks, do you know what it's gonna look like? Ugh...
By David - Appraiser,  Sun Apr 5 2009, 10:44
As a buyers agent you should know FHA regulations and requirements regarding the health, safety, and soundness of a property when your buyer is going FHA. Perhaps you were too focused on the amount of your commissions rather than the responsibilities for earning them.
By Randy Hooker,  Sun Apr 5 2009, 10:54
Hey David... I see you took a course on "How to win friends and influence enemies!" Very nice contribution, Mr. Expert! But since you opened up the can of worms, why did it take the appraiser over two weeks to even notify anybody of the condition?!?! If all you have to offer is personal judgment and criticism of my professionalism, rather than advice and assistance with the situation, then I hope you'll feel free refrain from commenting on my posts in the future.
By Lori Jeltema,  Sun Apr 5 2009, 10:58
Randy, first, I would check to see if your contract has a mandatory 'cap' on lender required repairs that the seller is obligated to perform.

Second, if your buyer is purchasing a home and the pool is supposed to give any value, it better actually be valuable. Even if no value was given to it, FHA is not going to change their mind. Even a run down shed in the back yard may have to come down with FHA, even if it was given zero value at time of contract. What you are in favor of doing is not the point. It's your client who has to live in the home after it closes and you owe it to him to have the pools condition and function verfied. It's tough to get this far and have issues. Even if your buyer doesn't care about the pools condition, the FHA does. A good relationship with a good lender will enable you to run properties by them prior to writing a contract and the buyer spending time and money. There are also great appraisers all over the place that you can ask for guidance when you are in doubt. On occasion, when we were not sure if there was going to be an appraisal issue, we would ask the bank to order the appraisal first, before the client spent money on the home inspections, gave notice to his landlord and hired the moving truck. Once past the appraisal issue, you've covered one of the biggest hurdles. The appraiser is doing their job and be thankful for it. Having something like that overlooked is doing nobody any favors. What you do not want is to fill the pool up, try to convince the appraiser that it is functioning and have your buyer call you two weeks after closing to inform you that the pool is cracked, leaking, or is now part of a giant sink hole in his back yard. It may help in the future to sit through some appraiser classes. It won't make you an expert - there is a lot to learn - but it may help to trigger that red flag in the future and prevent something like this from happening again.
By Lori Jeltema,  Sun Apr 5 2009, 11:03

You are an appraiser and obviously able to contribute a lot to this forum via informational blogs and answering Q & A's with sound advice. How about it?
By Randy Hooker,  Sun Apr 5 2009, 11:13
Lori ~ Thanks a million for your well thought out and sensitive comments and suggestions. I'll definitely be making moves to educate myself in the FHA 'conditions' arena. After 12 years as a full time Realtor/Broker, this is the very first time that I've encountered it - and I've never seen any blog posts, articles or anything written about it before. So could I possibly have seen the red flag before we wrote the contract? Yes! The reason for my post was to make other REALTORS® aware of the issue, and to open it up for thoughts and suggestions on possible solutions. Thanks again for your time and input!
By David - Appraiser,  Sun Apr 5 2009, 12:58
Randy - why did it take the appraiser over two weeks to even notify anybody of the condition?!?! I don't know, I didn't do the appraisal. That would be something you should ask the appraiser who actually did do the appraisal. Perhaps it was two weeks before the appraiser received the assignment!! Or perhaps it was two weeks before the LO, processor, and/or underwriter even LOOKED at the appraisal!! Or perhaps NOBODY LOOKED at the appraisal and it was rejected by FHA!!!! Or perhaps everyone involved with the transaction expected the appraiser to ignore and not metion the condition of the pool to slip it by and close the deal quickly before it was caught!!!! Many many possibilities....

It would seem haveing 12 years in the business, and over the past year, or year and a half, where most financing has been going FHA, one would be aware of requirements, regulations and guidelines for property inspections and underwriting guidelines when representing "the best interest" of a client - especially when dealing with REO properties which are making up at least half of all current sales. But then as a Real Estate Professional, one would already know and take such information into consideration and use as part of the negotiations "on behalf" of the client and "in their best interest" as so many "professionals" state in their sales pitches to get clients.

Whether my comments are considered advice or criticism would depend on one's business objectives and practices. However, as a member of this forum community I will post comments, opinions, and views on any post I choose, within the forums rules and guidelines.

Lori - I have contributed advice on appraisal procedures and processess and suggestions on how appraisers can provide information and services to aid buyers, sellers, and other "professionals" on this and other forums. Including similar advice to what you posted - "There are also great appraisers all over the place that you can ask for guidance when you are in doubt." - "The appraiser is doing their job and be thankful for it." And I will do it again for Randy's benefit for "educational purposes" by including a link to FHA's Appraisal Handbook - http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4150.2/index.cfm - with emphasis on viewing Appendix D: Valuation Protocol - http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4150.2/41502appdHSGH.pdf - for his or anyone else's reading and enjoyment.

Have a nice day!!!!
By First Time Homebuyer,  Fri Apr 24 2009, 17:32
I am in almost the same position. I am a buyer who was supposed to close on a REO house in less than a week. My realtor, lender, and appraiser knew that there were no pumps, filters, etc and that the pool was filled with green rain water. The appraiser went out over two weeks ago. It goes to underwriting and they get back that it's approved but the pool needs to be filled with clean water and in working condition. Why did nobody say anything? At this point, I don't know what to do. I am willing to pay for repairs and get it done. My lender and realtor want to go to the bank and have them pay for repairs. I don't want to lose this house over this. The only other issue is that the water is turned off at the home, so I can't fill it from the house. The house has already appraised for 65,000 over sales price. The cost to fix is quoted at 2600.00. The other issue is that now we cannot close on time as well. I am so frustrated that all professionals involved said nothing. This could have been worked out and fixed in the past month. Ugh!! All suggestions are welcome.
By Randy Hooker,  Sun Apr 26 2009, 14:06
Hey "First Time Homebuyer,"

What I've been finding is that MANY professionals, including agents, lenders and even appraisers were unaware of the "pool-must-be-filled-and-running" condition. It's apparently not a new rule by FHA, but it is definitely a serious one. At this point in your transaction, it sounds like your agent is trying to work on your behalf and get the seller to pay for the filling and repairs - but that come down to a contractual issue. But since time is of the essence, I would recommend that you get nose-to-nose with your Realtor, let him/her know your feelings and wishes, and then ask him/her to make it happen the way you want it to happen. And either way, will you let me know the outcome? In my case, everything went just fine, and we've already recorded. So take heart! :) Thanks for stopping by and commenting. Good luck!!
By A Fha Home Buyer,  Sat May 9 2009, 10:07
We're in the beginning stages of a similar situation. We're FHA approved and ready to make an offer on a REO property with a green pool in the backyard. We will be filling in the pool (not using it) after we have the house, but there is no filter attached so it will not meet the "running" condition. Is there any way to get this to pass FHA? Any chance that the bank would be willing to pay for the 'fill in'? What would you suggest?
By Randy Hooker,  Sat May 9 2009, 12:43
I don't know where you're located, but I would strongly recommend that you discuss the situation with your Buyer's Agent Realtor. You should also discuss it with your lender BEFORE you submit an offer on the property. My understanding, from my preferred lender, is the FHA will require the pool to be filled with water or dirt BEFORE the appraiser can release the appraisal. There are additional clause(s) that your Agent might even want to consider writing into your offer. My best advice would be that you NOT enter into the contract without making sure you have all the bases covered.

If you do not have a Buyer's Agent Realtor, and want to discuss your situation in greater detail, please feel free to email me directly.

All the best!

By Jon,  Thu May 14 2009, 10:43
No one has brought up the possibility of the buyer putting funds to repair the pool in escrow. The buyers probably plan to fix it anyway. See if that will appease your underwriter.
By Randy Hooker,  Thu May 14 2009, 11:49
Hey Jon...

The transaction has actually already closed, successfully. The appraiser, in accordance with FHA guidelines, would NOT accept funds being held in escrow for the filling of the pool. They insisted on it being filled with water or dirt, our choice. And they woulod NOT sign off on the appraisal unless and until the pool was filled.

By Zonians,  Mon May 18 2009, 16:02
Hi, does this rule apply to VA loans as well? We are interested in a house with a green pool and no appliances...although the plano had appliances listed and pictured. When we visited the house, the appliances weren't there, so we asked the listing agent....next thing we know, the appliances are removed from the plano and we were told, "we might want to ask the bank for a stove." This is upsetting because we are trying to do this from out of state before my husband deploys again! Any info about VA loans and REO's will be great!
By Randy Hooker,  Mon May 18 2009, 19:05
Hi Zonians...

I would strongly urge you to secure the services of a loyal, experienced, Realtor to serve as your Buyer's Broker, as well as a local, reputable lender who is experienced with VA loans. Are you attempting to deal directly with the listing/seller's agent? If so, then that's your first mistake. If not, then you really should consult with your agent to determine the best course of action to take at this point. Residential real estate really can be a VERY complex and overwhelming process. Please email me directly if you would like to discuss any of this further.

Thank you!

By Loren Green,  Mon May 18 2009, 20:42
I am just curious. To what extent is the appraiser required to inspect the pool? What training for pool inspection is required for an appraiser?

The AZ BTR Home Inspector standard of practise doesn't require us to inspect pools, but we all do it anyway.
By David - Appraiser,  Tue May 19 2009, 07:24
The appraiser is required to inspect a pool only to the extent of what is readily visible. Appraisers are not building inspectors, pool inspectors, environmental inspectors, or termite inspectors, however, the education and training (18 months minimum) enables the appraiser to inspect a property more thoroughly for adverse conditions than a buyer, and as the "eyes and ears" of the buyer and lender for collateral risk determination.

The condition of the pool, and if it is functioning (properly or not) falls under the FHA guidelines of Health & Safety, as does the heating/air conditioning (which needs to be turned on - heat and cooling), as does the water system (turning on faucets, flushing toilets, checking for drop in water pressure and obvious leaks), as does visually inspecting the attic for obvious signs of roof leakage, and so forth.

FHA guidelines may not specifically say the pool needs to be full of water or filled in with dirt, but they DO require the appraiser to address the condition, as stated, from a Health & Safety issue, and address any local regulations such as pool fencing.
By Tink1207,  Mon Jun 8 2009, 14:38
I am in the process of buying an REO property FHA also, with an empty pool. While we were supposed to close this past Friday, It was brought to our attention 37 days in and 3 weeks after the appraisal was done (but we did not receive it til the week prior to close??) that the pool is Empty! I suppose gated or covered did not matter. The house was bought at auction and is considered as-is .. the original listing agent says .. no repairs are allowed... Filling a pool is not a repair ? isnt it part of what makes the house FHA approved for sale? We are now waiting for my bank to respond to seller with what is required... the pool is full of mud, leaves, sand... does simply putting water in it qualify .. or does it have to meet health and safety I.e. be cleaned out and filled with clean running water? not green and gross? and since I am not the owner isnt this up to the seller to fix, so we can close? (they cant cancel the contract and keep my money if they decide to not fill the pool right? )
By Gem,  Thu Jun 18 2009, 15:53
I'm not a realtor or appraiser, but just wanted to throw in a comment right or wrong . . . Seems to me that it would be only logical at this phase of the closing process to just fill the pool - whether having it delivered or dropping the hose in - you're just going to do it anyhow once you close, right?

As a potential buyer myself, I would absolutely want to know whether the system was working or if someone's hiding a potential disaster that will cost big time. An inground pool is a very big deal since it's a permanent 'fixture' / improvement that you're also paying property tax on, so it does only seem logical that it is mandatory under FHA rules.

I had recently just saw a newcast regarding empty pools of non-occupied properties sitting on the market - in the Phoenix area. Seems that since they're not being used/ pumps being run, the water is becoming stagnant in the heat = the perfect breeding ground for mosquitos/ West Nile Virus (bet you never gave that a second thought!)

I will say that any of this never came to mind, even when viewing so many properties that do seem to have emptied pools. I can say though, that glad that this was posted, raising awareness on the issue . . . it gives a little more food for thought, as a buyer, with the all the questions raised = a catch 22, especially for a buyer that hasn't gotten quite that far in the mtg process. Maybe the listing broker should be responsible for making sure the pool is filled - if he wants to sell/ close on the property . . . but then, is it a good idea considering the above paragraph? Maybe it is a good idea to wait until an appraisal/ home inspection is already scheduled before filling?
By La-homebuyer,  Mon Jun 29 2009, 13:27
Technically speaking, FHA doesn't have the requirement, but most lenders, FHA or not, do. That's why here in LA cash investors are scooping up all the forclosures.
By Steve,  Sat Jul 18 2009, 09:56
The pool is obviously unfinished which is a bigger problem then just putting water in it. A FHA 203k might have been a solution. I'm sure you do not want to start over but ask your lender about FHA 203k. Most lenders will talk negetively about these loans because they do not know how to underwrite them. We have a couple lenders that specialise in them. http://www.fhaloanagent.com
By Cinn629,  Thu Jul 30 2009, 10:03
Had to add to the fray here, I'm a buyer obtaining FHA financing for a home in New England and can't resist adding my experience here...after two appaisals, the appraiser' report came up with some very minor items - frivilous in fact , and one less minor item, a foundation for a home addition... Even though it was already backfilled by previous owners to within 18" of the top, it had to be filled with dirt to the "top" to satisfy the appraiser. The local building inspector, and a licensed contractor and a licensed engineer we consulted all told the bank and the appaiser it was not necessary to meet any state or national safety codes including OSHA, but the appraiser of course had final say and will NOT take the advice of professionals.
My point here is appraisers, while general educated in their field are not the 'protectors of buyers they are proclaimed to be, and do not listen when licensed professional advise them. This is evidenced further in my case by the fact that while the appraiser was worried about unessary backfill in a foundation, she overlooked two MAJOR health and safety issues with the property that truly would have endangered my family (which I am taking care of on my own). One is the fact that the door from the garage into the finished basement are glass and do not meet code for fire rated steel doors , and the garage itself does not have sheetrock on the ceiling (with the living room above it) - both of these are major hazards to the safety of the occupants - and were missed. In addition, FHA did not even ask for a water quality report - which ofcourse I had done anyway on my own - and it came back positive for COLIFORM baceteria - basically the water is undrinkable!! Another miss by the appraiser, which we are correcting anyway..
My point is the notion that appraisers and FHA are looking out for the health and safety of buyers is laughable - in my experience they are NOT qualified to do anything of the sort. The buyers need to beware and rely on their own common sense to make sure they are safe and sound in any home.
By Dave Mullins,  Tue Jan 26 2010, 09:10
We ran across this situation early in the process. My wife and I were ready to put in an offer on an REO property, but the pool needs a liner replacement. You can easily tell that the plumbing, pump and filter are intact but the liner was allowed to weather with no water in the pool for a year and how has developed cracks along the top. It would not be advisable to fill it for an FHA inspection without first replacing the liner. To do so might cause more problems than we want to deal with. My wife and I would be willing to have the pool inspected by a professional to certify the integrity of the pump and filter system. Couldn't the plumbing be inspected by air pressure method? I would be willing to escrow the amount of the liner and installation cost, but am not willing to pay for the repair pre-closing. We are wanting to use FHA because quite frankly we don't have the cash to put 20% down right now. I can appreciate the safety concerns. I would even be willing to escrow the cost of a safety cover which we would probably use every year to winter the pool. This is Indiana and the temp is going to be single digits later this week. Do we really have to fill the pool? I guess we can ice skate after the appraisal.
It appears we will have to pass on this one. It's just frustrating that government regulations get in the way of good business and common sense.
By Randy Hooker,  Tue Jan 26 2010, 11:34
I do understand your frustration, Dave, but to my understanding the pool MUST be filled with water, and circulating, or it must be filled with dirt. Best advice I can give you is to discuss the situation with your Buyer's Agent first, and then your Loan Officer. Best of luck to you!
By Jeanne,  Thu Jan 28 2010, 17:25
We ran across the same problem. We were suppose to close next week and yesterday told about the empty pool. The liner is missing and pump is disassembled. Its an above ground pool with a deck surrounding it. Honestly our plan was to take the pool out and finish that area as part of the deck. Well to make this go through we wondered if we got permission to pull out the pool and put a railing around the hole. Would that satisfy FHA?
By Randy Hooker,  Thu Jan 28 2010, 20:06
Leanne, I honestly have no idea if the appraiser would buy that. The entire issue with FHA and pools has to do with safety, so the appraiser might very well require the hole be filled with dirt. But in your circumstances, that might be more prudent than dealing with the pool issues. If the lender can communicate with the appraiser, see if s/he can run your idea past him/her. Good luck!
By An Appraiser,  Mon Mar 22 2010, 21:46
FHA is picky and as an appraiser, I do my best to follow all their rules. Those rules are designed to help identify any safety or health issue that may come up. Cinn629 has a right to be upset, but must understand that the FHA appraiser was doing what he or she thought best. FHA used to make all homes serviced by a well have water purity tests but due to complaint after complaint by home buyers, realtors, etc. they stopped that practice. Now maybe FHA will have complaints regarding backfill in a foundation area (which i myself in 10 + years of FHA appraising have NEVER heard of) and remove that requirement. FHA loosened their requirements in order to provide more FHA loans, and in turn more homes to more people. If you don't like the fact that your water was not tested, thank all the prior FHA loan getters who raised cane because they had to go through the pain in the butt of obtaining a water test. FHA is there for you, not the appraiser, not the agent and not the lender--they are for the homeowner. No, an FHA appraiser may not catch everything in your house that might need addressed, but hopefully they may help you not lose money as soon as you close due to costly repairs. Hire a home inspector! They are supposed to pick your home apart and they are supposed to know local code...not an appraiser.
By Sifounatsis,  Sun Apr 25 2010, 14:06
Unfortunately the issue with the pool is not only with the FHA loans. Nowadays even conventional loans have to have a running pool.

Me and my wife we put an offer at an REO house in Los Angeles, which we were told that the pool needs to have water or dirt. The pool is at the gunite stage and it needs plastering as well as some pipes for the pump. We are planning on fixing the pool while in escrow and hopefully all goes well and we dont waste 5k.
By Kellntrix,  Wed Dec 8 2010, 13:27
We are interested in purchasing a home in terrible disrepair. The pool liner is completely shredded & its the dead of winter here in NJ. Do you seriously mean we would have to get a new liner & fill the pool w/water to check the pump??? The ground is frozen & im sure all the pool equipment would be as well?? Any way around this?? We would be fixing the pool but werent plannin on it til the spring..
By Randy Hooker,  Wed Dec 8 2010, 16:17
@Kellntrix - You really need to check with your lender. To my knowledge, the FHA pool-must-be-filled-and-running rule is still in effect. The only one that truly advise you is your Loan Officer and perhaps your Realtor (Buyer's Agent). Best of luck you!
By Todd Hall,  Sun Jan 30 2011, 22:02
This is what happens when banks and the federal government call the shots. Logic goes out the window or down the drain (perhaps a better metaphor).
By Captmic,  Wed Jun 22 2011, 08:53
I'm an appraiser.........When in doubt, ask! So I did----I just called FHA Resource Center 1-800-543-9378. Give a limited list of options I punched "2" (Lender's)---got a live person--afters ID and some questions--was bumped to the Appraisal Section (you cannot call them direct they say). Per the person I talked to:
1. If the pool is non-functioning, can not give any value.
2. Pool must be safe--the person said a cover would make the pool 'safe'. We have a pool and have a $200 'plastic leaf tarp' . I asked if that was sufficient and the person said it would if it would keep a kid from falling in.
By Agonzalez,  Thu Jan 12 2012, 17:20
what about an above ground swimming pool? Does that have to be filled?
By Randy Hooker,  Thu Jan 12 2012, 18:07
I'm really not sure, Agonzalez. An above ground pool could easily be taken down and removed - correct? My inclination is to think that most FHA appraisers will still have to apply a 'safety and security' test to it, but the easy solution would be to simply dismantle the pool and haul it off. Best to check with your lender, tho.
By Nena35j,  Tue Jul 1 2014, 10:37
I'm a first time homebuyer on an approved short sale. This was a rather quickly approved short sale. I made an offer and my offer was accepted and signed by the seller in five days. The seller's lender accepted and counter offered in less than a week and I accepted their counter. I was approved for FHA and the appraiser required some minor repairs to be completed in a timely fashion before I am approved from the underwriter. I am a nervous wreck. I've gone this far and went through all the hurdles and now this is the final say so!!
By Randy Hooker,  Tue Jul 1 2014, 10:55

Is there a question in there somewhere?
By dinnca,  Sat Jul 12 2014, 14:06
i am purchase a home with an in ground pool that has been drained. It is an freddie mac property and my lender says they may cover repairs of pool. If they don't cover repairs will putting a cover on pool on empty pool allow me to get appraised and mortgage.
By Randy Hooker,  Sat Jul 12 2014, 18:20
That's a great question for your lender to answer. In my experience, simply leaving the pool empty, or putting a temporary cover on it will NOT make it past an appraiser. What type of loan are you using??
By dinnca,  Sun Jul 13 2014, 07:58
I am using a PHFA home loan. lets hope freddie mac will make some repair to pool before it gets filled.

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer