<p>What is your experiences with selling your house to a FHA borrower? I have heard its going to be a pain, because different restrictions.</p>
<p>I don’t think I will accept an offer like that.</p>
<p>FHA has different requirements for your HOUSE but if you exclude FHA buyers and you are in the FHA price range, that is a big mistake. Basically you need to make sure you don’t have any pealing paint, broken hand rails on stairs inside and out and that your appliances and furnace work. Those are the big things that hold up closings. It isn’t that you can’t close, you just have to have those things fixed before you close. If your house is in good shape and priced right, you won’t notice a difference from a conventional loan buyer to an FHA buyer.</p>
<p>I have heard that the inspection will be a killer, and you will have to address/fix every nit-picky thing in order to get loan approval. Loose caulk on a window? Crack in the driveway? No loan.</p>
<p>Supposedly they have eased up on this in the last couple years.</p>
<p>This past April we sold our home to a man with a FHA loan. We didn’t have any big problems. We had done a lot of renovations before putting the house on the market. The inspector was only able to find very minor stuff.</p>
<p>Coincidentally, the same day we got the offer from the eventual buyer, we got a second offer that also involved HFA financing.</p>
<p>here is a check list I found on the net regarding inspections, has anyone had experiences with it?</p>
<p><a href=“http://www.biggerpockets.com/renewsblog/2010/04/25/fha-property-inspection-checklist/[/url]”>http://www.biggerpockets.com/renewsblog/2010/04/25/fha-property-inspection-checklist/</a></p>
<p>It is taking care of the punch list that is the pain. Let’s say your house is listed for $100,000, and you are willing to accept $95,000 from a non-FHA buyer. Then, set your limit at $97,000 for the FHA buyer so you have $2,000 to deal with all the little things. Also, leave yourself an out, that if the punch list is more than $2,000, you can terminate the deal.</p>
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<p>When we sold our previous house in 2001, DH refused to consider an FHA offer that we got, precisely for the above reasons. He does escrow and home inspections, so he knew how grueling it would be. </p>
<p>Packmom, did you have to fix all the minor stuff before they’d approve the loan?</p>
<p>After inspection, we had to update a couple of electrical recepticles in the garage, get a seal replaced on the spigot on the back of the house, replace one strip of insulation in the attic and put one of those cheap plastic drains on a downspout to direct rainwater away from the house.All minor stuff… We prob. spent about $100. </p>
<p>However… previous to putting the house on the market, we had did lots renovations…new HVAC system,new vinyl windows,new carpet and tile,painted every room in the house,painted exterior of the house, updated bathrooms and added new granite countertop w/ undermount sink/ new faucet and new tile backsplash in the kitchen. We had a crack in the driveway that DH patched himself with some sort of calk type goo. </p>
<p>We spent a LOT of money updating but knew that it was the only way to sell our circa 1988 home in our suburban town w/ dozens of nice neighborhoods…most of which are newer than ours and all with plenty of houses for sale. To compete, we had to update. Our house sold in 24 days. Original asking price was $200,000. We sold it for $195,000 (buyer paid all closing costs). </p>
<p>The buyer, a single college professor gentleman, was preapprovd for the loan. It all went through without a hitch. Our realtor said it was the easiest one he’d ever been involved with. So I guess the key is to fix stuff ahead of time so there are no big surprises on inspection.</p>
<p>I think it can be foolish for sellers in some markets to not consider selling to a buyer using FHA, VA, or Farmers Home government type loans. These loans can allow buyers to purchase with little or nothing down and thus increases hugely the pool of potential buyers for a seller. Not everyone has all cash or a 20% downpayment in hand to buy. Keep in mind that sellers may be required to chip in some for buyers closing expenses at closing with these loans, so be sure to build extra seller required contributions into sales price. Most any real estate sale has inspection and repair provisions–seller should build a cap into purchase agreement to limit how much you can be on hook for any required repairs.</p>
<p>Just over a year ago when we went house hunting, we were pre-approved for an FHA loan as well as a conventional one. We would have needed the FHA for a more expensive property than the one we ended up buying. In at least one home that we looked at, our agent flat-out told us that FHA would never approve the loan because of X, Y, and Z. Those particular issues were serious enough that even we could see them as deal-breakers.</p>
<p>FHA insured loans are not for everyone. If a seller has a leaky, shot roof and is not willing to fix it, FHA probably isn’t going to fly.</p>
<p>We just declined an FHA offer at a higher price for a just slightly lower all-cash deal. Personally, I was disappointed to see that borrowers are still being allowed to buy expensive homes with 3.5% down payments. No wonder they need to inspect the heck out of the houses – they have absolutely no resiliency for any of the many things that can go wrong when you buy a house. That just seems like another housing disaster in the making.</p>
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<p>Right, it was cheap – but only because you’d done all that work already. That’s the point: If your house isn’t in tip-top shape, accepting an FHA offer might cost you a lot of money, whereas with a non-FHA there’s a good chance you can negotiate your way out of doing the repairs. For example, when we sold in 2001, the home inspector came up with something like 20 items. The buyer wanted us to fix all 20. We countered that we’d fix the two safety-related items, but not things like a small crack in the patio, and the buyer agreed to that. Or we could have offered to drop the price by the amount of the safety-related repairs. With FHA, there’s no such flexibility, and we would have had to fix all 20.</p>
<p>I’m currently in the process of looking to buy, and I’m actually pretty amazed at some of the safety related things people don’t remedy when they’re living there. How do you wind up with power outlets and light switches that don’t have the face plate on them in the first place?</p>
<p>arabrab–there is a max loan amount for FHA and it isn’t all that high. It’s a great program for first time buyers that want to get into a house. We used it for our first home. Our son is looking to buy a home through the FHA loan program. His house payment will be less than rent, by half. He can afford the payments quite easily but coming up with 20% down for a young 20 something kid isn’t always easy.</p>
<p>LasMa–if their house wasn’t in tip top shape it wouldn’t have sold as fast either or it would have been listed for a lower price. It isn’t just FHA that wants a house to be in good shape. Buyers have the power right now and if your house needs too much work, you are either going to get lowballed or not get any offers at all.</p>
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<p>In certain areas, the max FHA loan amount for a single family or condo is $729,750. </p>
<p><a href=“https://entp.hud.gov/idapp/html/hicostlook.cfm[/url]”>https://entp.hud.gov/idapp/html/hicostlook.cfm</a></p>
<p>^^^ which will buy you a 2 bedroom condo, maybe, in those areas…</p>
<p>Where we are buyers are at a HUGE disadvantage. Inventory is bone dry, most of the houses are in poor shape, and they are getting 5-6+ offers above asking within only a couple of days, including cash offers. Buyers with mortgages are having huge problems with homes not appraising at the price the competition drove them up to. In that case, an FHA vs a conventional loan could make a huge difference, but not some of the differences I am reading about here. Our mortgage is conventional so I don’t have personal experience, but I have four or five friends who have all bought nearby my area in the last year or so with FHA loans and they did not have the same kind of nitpicky inspection situations that are described here. Major issues would have been a problem, but they didn’t need to get every little thing fixed. It’s been a year for one friend and she has still not finished all the little repairs her home needed when she bought it. Water leaks out the bottom of her bath tub, most of the seals are broken on her windows, and her garage had moss growing on the shingles. She ended up having to replace the roof in order to get homeowners insurance, but she didn’t have a problem with her FHA financing.</p>