Jyl,

Goodness, you can roll all your expenses into your loan, adjust the price to include all, or at least most and get your out or pocket back! Do you have an agent representing you?

Janice Jennings
Broker-G. Stiles Realty
1-800-275-6375

After the inspection, i asked for a number of items to be repaired, including a chimney repair for $3,000. The seller only offered $1,000 for everything, which was really frustrating because i know the property needs a lot of work in addition to what i asked for in the repair addendum. So what we've done is extend the inspection contingency period until the end of the week so that we can get the appraisal done during it, and find out what absolutely needs to be fixed for the property to qualify for the loan. We also got the seller to sign an addendum that states they'll contribute up to $3000 for necessary repairs as called out by an FHA appraiser or underwriter. My concern now is that the appraiser will find say, $6,000 in needed repairs, and the seller will only be on the hook for "up to" $3,000 of that. I don't have any more that i can come out of pocket (I've spent over $2,500 in the last 2 months on inspections/sewer scopes/oil tank locates/soil sampling on other potential properties) so it's likely i'll have to back out. The seller also says she cannot cover anymore than what she has agreed upon, so it sounds like neither party has the money. If I back out she might be able to sell the house at a higher price and then have the money to fix some of the stuff, but she might have a hard time finding a buyer now that she'll have to disclose the repairs that must be made (i think?). So we're trying to tell her that if she wants to sell her house to an FHA buyer (80% of the current market, according to my agent), she'll have a repeat of this scenario with another buyer.

FHA does not loan, AS IS, if they have required repairs, the repairs will be done, or the loan will not close, the sellers agent should of advised the seller to go FHA knowing this with repairs possible. Most conventional lenders are not letting repairs to go either, these days.

Best too to have a home inspection, most buyers these days, do that before the appraiser ever gets there, that's to cover the buyer, the appraiser's list of repairs is to cover the investor, so either way the seller should expect repairs, and they should have been advised to be ready for them.

Unless this is a bank owned property, that's the only ones that gets to sell "AS IS" these days, and then we are back to the Rehab loans, and so on. But the limited repairs noted here should just be done before closing by the seller.

Best to you.

Yes Jyl,
it looks like those things will get called out by the appraiser. but it doesn't mean the deal is dead. it means that you need them done by the seller before you can close. If you have a stern seller and a strict offer that says AS IS and no repairs, then you will be in a tough spot. I would at least, take the appraisal report to the seller and try. You will be surprised at how bad a seller wants to sell once they know what needs repaired, and has a buyer ready to buy and bound to a contract.

If all else fails, there is one other loan option to try. and that is the FHA Rehab loan. Jennifer mentioned it. It doesn't work for everyone, but its something you should check into before giving up all hope.

good luck.

The repairs you note are ones the appraiser will also notice and yes they are required, peeling paint, old lead base, or bad paint with wood showing, both have to be repaired, chimney is a safety item, so that too needs repair. Hand rails, again is a safety item, as is the broken windows. So you have it down, those items and maybe a few more the appraiser should notice and call out. You have the major things in good shape, so just remember the investor needs to know what they are loaning on is in good shape. Like the house has to sell twice, once to the person that lives in it and makes the mortgage payment, and the investor, that makes the loan.

Best to you.

In the past I have had FHA flag the following items:
- Peeling paint due to the possibility of lead based paint (potentially in homes built prior to 1978)
- Leaks
- Windows that wouldn't stay up

The FHA appraisal standards have loosened up in the recent past. Another avenue that you can check out is the FHA 203k program which is to help with renovations. Check out HUD's website below....
We recently had an old house approved with the FHA 203k loan.
Good luck to you!

Follow up: My appraisal is scheduled for Tuesday, and there are several potential things that I'm concerned about. There are a few broken windows, missing hand rails on the stairs the the basement, the exterior paint has peeled to the point where there's exposed wood in some areas, the chimney is leaning/cracked/deteriorating and requires a rebuild from the roof line up. Still, this house is in fairly good shape compared to most of the other's ive seen in regard to "Big ticket repairs"....the sewer is brand new, the electrical has been updated, water heater and furnace are in proper working order and not very old, etc. etc. I've only looked at older houses, mostly from the 1920's, and I expect to do a good deal of repairs and restoration. But i didn't expect for the deal to possibly fall apart if the house doesn't qualify for FHA.

http://www.hud.gov/offices/hsg/ramh/mps/mpshome.cfm


There is the website from HUD/FHA. Not knowing what your house has that you think does not meet, that should help.

Best to you.

Good question. Unfortunately, the answer varies depending on the FHA/VA Appraiser who is appraising the property. There a 5 page check list they use to identify a variety of "health and safety issues". Some Appraisers are more thorough and detailed on this list, which is much like an inspection of the property and others focus on the big issues.

However, before you get all the way to the appraisal point (which will cost you money, not to mention time and commitment) in a home purchase, your Buyers Agent will have a good idea of potential items that could get called out as lender required repairs, but it can be anything from a broken window pane to filthy carpets to roof life and on and on. Your agent will steer you away from homes that are obvious fixers or properties that are being sold as is because the seller cannot or will not do repairs.

FHA is the predominant loan in today's market place, so make sure you have a skilled representative that will look out for your best interests, including understanding the FHA/VA Appraisal process.

Linda Heinrichs, Broker
RE/Max Equity Group, Inc.
503-495-5227
lindaheinrichs@remax.net

There are a ton of guidelines. Go to FHA website for more. But here are some:

dryrot, none
mold, no obvious evidence
crawlspace clearance, 18"
vegetation around the exterior 12"
hand rails on stairs and porches
roof life 3+ years
water heater off ground, and if natural gas, property venting

this is just off the top of my head,
was there anything specific you were concerned about?