Selling Your Home To A Buyer Using Financing.
Government Backed Loans (FHA/VA) Standard Repairs
Thinking about listing your home? It’s always good to know what to expect if you list and receive an offer that is FHA. Most conventional loans follow these guidelines as well.
For an FHA loan, the U.S. Department of Housing and Urban Development (HUD) requires an inspection of the home’s condition. In order to pass inspection, the home must meet minimum safety, security and soundness standards. In addition, its structural integrity can’t be in danger of being compromised.
The good news is FHA does not require the repair of cosmetic or minor defects, deferred maintenance, and normal wear if they do not affect the safety, security, or soundness of the home. However the buyer may require these items be repaired prior to closing because it is not an expense they want to take on.
What items are required to be fixed?
Roofing: The roof must be sturdy enough to reasonably last two to three years and it must keep moisture out. In addition, the roof can’t have more than three layers. If it does and the appraiser finds enough damage, they would require a new roof.
Structure: The overall structure of the property must be in good enough condition to keep its occupants safe. This means severe structural damage, leakage, dampness, decay or termite damage can cause the property to fail inspection. In such a case, repairs must be made in order for the FHA loan to move forward. Foundation is a common issue in Texas, and this must be remedied before an FHA loan can close on the house.
Heating , water and electric: Each inhabitable room must have an adequate heating/Cooling source. In addition, the water heater must adhere to local building codes. Electric boxes must be up to code and can’t have damaged or exposed wires.
Safety hazards: An appraiser would inspect the property for potential safety hazards such as asbestos. In the event that the inspector finds asbestos that may be damaged, an asbestos expert must conduct another examination. Some hazards are not obvious such as contaminated soil.
Location: The property may not pass inspection if it sits in an area that’s too noisy or within proximity to a hazardous waste site, as defined by the federal government. Some examples of this are areas with heavy traffic, proximity to airport, high voltage power lines, or radio/TV transmission towers.
Access: To pass inspection, the home must provide access to pedestrians and vehicles, particularly emergency vehicles. These must be able to access the home under all weather conditions.
Bathrooms: The home must have a toilet, sink, and shower. (This requirement might sound silly, but you’d be surprised with what vandals will steal from a vacant house.)
What if I have some of the items above and do not want to fix them? If a structure failed inspection due to serious damage, it may be best for all concerned for the homeowner to sell to a buyer who is not getting FHA financing. In instances like this it sometimes makes the most sense to sell to an as-is CASH buyer.