â€œI'm still concerned about is: some sagging in a 1/2 bath floor (although he says there is nothing structural or even visible from underneath)â€
A: Old houses sag. Structural framing codes were different in the 40â€™s - if there is nothing visible underneath, then you should be OK.
â€œthe electrical is original 1940 fuseâ€
A: When you buy a home, you are buying it with the electrical codes as of when it was built â€“ not current codes. People have lived in the home as it has been for almost 70 years â€“ it has serviced them and can service you as well until you can afford to upgrade. Itâ€™s true that electrical demand has increased 1000 fold in the past 30 years, but you should be able to make do for now. Itâ€™s more important to get in than have a perfect electrical system. The only concern Iâ€™d have would be blatant electrical code violations â€“ work done by unlicensed professionals in a shoddy or hazardous manner. Your property inspector will be able to see these.
â€œthere is a crack in the back patio next to the house (no door or stairs there for tripping, but my agent is most concerned about this)â€
A: A patio is a free floating concrete slab that typically has no connection with the house â€“ so a cracked patio is not usually an indication of a cracked foundation. MANY Bay Area patios have been built with substandard practices â€“ these easily crack â€“ some within the first year after installation. Problems could be (1) improperly prepared soil under the patio, (2) lack of a proper base, (2) concrete lacks appropriate mesh and rebar, (4) Concrete may not be thick enough, (5) patio may have been undermined by poorly controlled water runoff â€¦ you get the idea. Personally, this has the least concern for someone like me â€“ and Iâ€™m a licensed general contractor. A patio is easy to replace â€“ a foundation â€¦ not so much.
â€œand the dishwasher may not work (I've heard of asking for it to be removed before appraisal)â€
A: Typically, FHA appraisers are not concerned with the dishwasher â€“ itâ€™s considered an â€œoptionalâ€ appliance.
â€œMy agent and lender think I have a 50/50 shot. Should I take my chances on the appraisal, or do you think I should let it go and keep looking?â€
A: Without seeing the home personally, itâ€™s hard to say for sure. Iâ€™ve seen some pretty bad houses make it through an FHA inspection, so Iâ€™m inclined to say â€œGo for it.â€
â€œI know it's not recommended, but what about asking permission for my brother to do the repairs before closing? I have first-time homebuyer's PTSD and am afraid I'll never get another offer accepted! I hate to walk away unless I'm really sure...â€
A: No of us here can or will recommend that you do that â€¦ but letâ€™s just say that while I cannot endorse a buyer doing any repairs prior to COE, and the owner may not even allow such to happen, Iâ€™ve seen issues â€œmagicallyâ€ remedied and FHA approval given.
As an aside â€¦ your agent should know all of this â€¦
For background's sake, I am a single mom of two who has been saving for a down payment on a teacher's salary for a few years... not the easiest thing to do in the Bay Area. I've watched down payment assistance program after program be eliminated (CalSTRS and my city were the ones I was hoping to use at one point). I made the mistake of waiting for housing prices and interest rates to fall trying to get into the perfect house for my little family and lost out on getting into SOMETHING before everything went crazy where I live. Now, FHA is all that's left, but the are tough for quite a few reasons.
My brother is a contractor, I have no problem getting pretty much anything repaired, replaced, remodeled, but FHA has to approve the house first, anyway. This cute, little house looked great to me FHA-wise, and I opened and touched everything, took pictures where I had a question, etc. I really liked some of the old, quirky features, so asked my agent to put in an offer. However, after about 20 houses I've put offers on in the last 9 months going to all-cash investors (not higher bidders, for sure), I was shocked that my offer was accepted. So, I sent my brother out to do a more thorough exam before I pay for an appraisal or inspections. He didn't find anything catastrophic, but a few small problems.
After reading the expert responses here, what I'm still concerned about is: some sagging in a 1/2 bath floor (although he says there is nothing structural or even visible from underneath), the electrical is original 1940 fuse, there is a crack in the back patio next to the house (no door or stairs there for tripping, but my agent is most concerned about this), and the dishwasher may not work (I've heard of asking for it to be removed before appraisal).
Good News is: It has just been completely repainted inside, has new windows throughout, heater is old, but works, doors all work, the roof is new, hardwood floors are in beautiful condition.
Bad News is: this is an as-is property, they aren't going to wait 60-90 days for a 203k to close, they aren't going to repair anything.
My agent and lender think I have a 50/50 shot. Should I take my chances on the appraisal, or do you think I should let it go and keep looking? I know it's not recommended, but what about asking permission for my brother to do the repairs before closing? I have first-time homebuyer's PTSD and am afraid I'll never get another offer accepted! I hate to walk away unless I'm really sure...
Essentially, the Appraiser is the lender's eyes and ears, so he/she is obligated to provide both an estimate of value and an evaluation of â€œhealth and safetyâ€ conditions. The Appraiser makes a value determination â€œsubject toâ€ any identified corrections.
Now, you may be thinking: â€œHow do I know what classifies as a health and safety issue?" Well, there's not an "App for that"; but there's a document to refer to!
The FHA Appraiser's Handbook provides direction to the Appraiser on what constitutes a â€œhealth and safetyâ€ issue. For example:
"Required repairs are limited to those repairs necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants."
"The property must be free of all known hazards and adverse conditions that: may affect the health and safety of the occupants.."
"The appraiser must note and make a repair requirement for any health or safety deficiencies as they relate to the subject property,.."
What actually constitutes a "health & safety" issue was revisited in a 2005 Mortgagee Letter (this is how FHA changes/clarifications are announced). There are many examples of items that DO and DO NOT fall under the category of a "health & safety" issue, which can be reviewed here:
Best of luck with your search!
Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
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Usually the repair of any such items becomes a funding condition on the loan, so must be corrected & reinspected prior to COE. This is a problem if seller is unwilling to do so, as the buyer doesn't yet own the property either.
I have gotten around this on more than one occasion with some rather creative solutions, so it isn't necessarily a deal killer!
Keeping in typical fashion of government they want to control the whole situation and say what needs to be fixed before they will allow the loan to go through.
On one hand this is good to protect you but on the other in this competitive market its why no one wants to accept a FHA loan - regulation.
â€¢ You must be able to open, close and lock all doors and windows. No broken windows, missing doors, etc.
â€¢ You must be able to heat the home properly.
â€¢ You must be able to use all bathrooms correctly.
â€¢ You must be able to operate all faucets and sinks properly.
â€¢ You must be able to prepare and cook a meal (no fridge is not an issue).
â€¢ You must be able to turn on all lights.
â€¢ You must be able to walk on all the flooring. No holes or major defects.
â€¢ You must be dry â€“ no roof leaks.
â€¢ You must be protected from fire and carbon monoxide by approved detectors.
â€¢ No unpermitted â€œhabitableâ€ additions or out-buildings.
â€¢ No peeling paint.
â€¢ No obvious structural damage.
â€¢ No obvious foundation damage.
â€¢ No obvious code violations such as improper or defective wiring.
Perhaps this article from San Francisco Chronicle will help you understand what they are looking for
In a competitive market, some sellers may prefer not to have to deal with buyers with FHA loans, the reason being that FHA will require certain repairs before the loan is approved. Most sellers would rather not do any repairs.
And if there are buyers willing to buy without asking for repairs or credits, the sellers may be more inclined to go with those buyers instead.
Deborah Rigsbee Miller, Real Estate Broker