t-15 firefighter

Some of you may remember from a while back that we have our house and property up for sale. We received an offer and we accepted with a counter. The counter stipulated that we would accept his offer but he was going to buy the house “AS IS”. They accepted this offer and passed on a home inspection. So far things are moving along nicely but I have a question for anyone that may know about home appraisals. FHA appraisals to be exact. Our house was built around 1929 and the person that is buying the house and property are trying to go with an FHA loan. How much more stringent are FHA appraisals as opposed to a “regular” appraisal? I realize that some of it will depend on the appraiser but what would you think would be some of the big things that they might really be looking for? I’m trying to get all my ducks in a row so I will have as little to do once the appraiser comes out and looks at everything. The one thing that I am pretty sure that he will “hit” on is the electrical. What I mean by electrical is that none of the outlets in the house are grounded. But they didn’t have to be back in the day. I’m just looking for any ideas that you guys might have that I might look for.

The house is in VERY good shape for its age and there are no structural problems, leaks, or anything wrong with the plumbing. Of course there will be a lot of things that won’t be up to code but it is my understanding that the house doesn’t have to be up to code since it was built so long ago? I could be wrong though.

Here is the finished house



Thanks in advance for you input.

Britt

darrenG

if the house is in good shape, why are there 3 wires holding it up?

t-15 firefighter

I was hoping that they wouldn't notice that

Britt

P.J

FHA is a PAIN in your butt. We don't even accept FHA/VA orders anymore. Fannie Mae expects the Appraiser to be a home inspector (no-joke).

Not only do I have less than desireable experience with FHA Appraisals, I sold my first house to an FHA buyer and it was not easy.

How about R30 attic insulation? Smoke detectors (I'm sure your good to go on this) in every bedroom, hardwired with battery back up? Got a basement?, they'll smack you for a drop of moisture down there. Got GFI's in the kitchen, baths and exterior outlets? Lead Based Paint?,

I would suggest going the FHA/VA website and see if they mention the rules and regs. I can tell you the older the house, the tougher is is to go FHA. Alot of the houses up here are sold "Cash or Convential Only" just to aviod the FHA insured buyer. Your "as is" may not be much help, as the contact probably states something to the effect of you "working with" the buyer if he's FHA. (this usually has more to do with the amount of concession, or settlement help you can provide, but can also address repair items).

Anyone with FHA lending experience is going to tell you that it is a royal pita for sellers.

I can answer specific questions if you come up with any, I have an associate that does FHA work.

P.J

This is the disclaimer I use to distance myself from being a Home Inspector (which I AM NOT).
The FHA Appraiser has a "VC" sheet he will use that address almost everyone of the things I claim to know nothing about.


In this assignment, the existence of potentially hazardous material used in the construction or maintenance of the building(s), such as the presence of RADON, UREA-FORMALDEHYDE FOAM INSULATION, LEAD PAINT, TOXIC MOLD and/or the existence of toxic waste, which may or may not be present on the property was not observed by the appraiser; nor does the appraiser have any knowledge of the existence of such material on or in the property. However, the appraiser is not qualified to detect such substances.


The Appraiser has done this Appraisal on the basis of an Extraordinary Assumption, as defined in the Uniform Standards of Professional Practices (USPAP). It is assumed that all Mechanical Systems, Plumbing and Electrical Components are in Average Condition. No Testing has been done of these items. This Appraisal is based on my observation of the property and Does Not include Testing or Home Inspection Analysis. It is Assumed that the Data is Accurate; However if it turns out to be different than that reported in this Appraisal the Final Opinion of Value could be altered.

t-15 firefighter

Thanks P.J.

That is the kind of information I’m looking for. I really don’t believe that he will be able to go with an FHA loan on this house. Mainly because if they try to get me to fix too much I will be unwilling to do it. I wish I had known a little more about FHA before I agreed to the offer. I would have probably countered with a no FHA offer. I really don’t think that this person would have any problem getting a conventional loan and with interest rates as low as they are right now he may very well do just that. I assume that conventional loans aren’t nearly as stringent on the appraisal?

I guess I will find out Monday. At least that is when they say the appraiser will be here. They seem to be dragging their feet.

Thanks again

Britt

iker42

That was like the first thing I noticed ...Paint um blue so the buyer wont notice um

Fronty Owner

When I bought my house, I told the appraiser what the owner and I agreed on and she marked it up so my loan would cover the mortgage and expenses if I wanted. It didn't hurt that two other houses in the neighborhood just sold for about the same as mine appraisal.

I haven't delt with FHA/VA/etc, but like most governmental supported lenders, they want you to meet current building codes and current NEC codes even if your house was grandfathered in because of age.

P.J

No problem. Watch and wait, I had a newer rancher (built in '89) and still ended up dropping about $400.00 to make them happy. That was with the buyer lending a hand too. Yes, Conventional loans are a piece of cake, standard underwiting, no non-sense. I guess I souldn't say nonsense, FHA has it's rules for a reason. I was told once that they do it so the new homeowners don't default in the first few years of the note over something stupid. You'd be suprised. I made an offer on a house that they owners had moved out because they ran out of propane (seriously, they hooked up two 20lb. BBQ cylinders, then ran out of money and gave up). I'm not making fun, it's sad. FHA gets left holding the ball, foreclosure gets expensive.

Never know, you might be okay. I had figured ya'll were gone by now, our market is starting to slow a little too. Just in time for us to decide we want to make a move.....

joefarmer

I bought mine with FHA, I figured the home inspection would be a little more indepth than it was. They didn't care that I had 2 prong outlets (unless you could tell the had been replaced since 1959 when the house was built). The only things mentioned were the gutter leaks and the main electrical box had a breaker that had too many outlets for their liking. Still, nothing that had to be fixed before I offered what the seller was asking minus closing costs. No big deal when the countered with $1k more than the asking price and essentially paid closing costs for me. Let the buyer to the inspection, they have to prove to you that it needs fixed.

brandon.

Chrisreyn

We just finished selling a house and our first potential buyer wanted to go FHA.
Now our house was 5 years old,and the market appraisal was almost 50K above the sorounding properties.When we built, we spared NO expenses during building on ensuring everything was up-to-date and such. GFCI's in EVERY outlet box, hard wired Smokers in each room, plus one in the attic,every door was 36" wide ect ect ect....FHA came out and did the inspection, in the garage attic space was a ele. box hung on a rafter. No wiring to it, just a blank box. I had hung it in anticipation of putting in a light one day and forgotten about it.
FHA stated our house was "defeicent and had electrical hazards that would require repair and prior to a follow up inspection"...
We told those folks" Sorry" and moved on.....

FHA is a pain in the area remotely connected to the neck by the spine...

spunbearing

If you are worried about the electrical you can do two things. You can replace any of the 3 prong outlets with the original 2 prong type. If there are 3 prong outlets installed it is an assumption that they are grounded. If there are 2 prong outlets there is an assumption that they are not grounded. Second thing that you can do is install GFCI breakers, or install a GFCI outlet on the first outlet in the circuit. Connect the other load circuits to the load side of the GFCI and they will all be protected. You Have to indicate on each outlet " no mechanical ground". I usually use stickers.

MedicShawn

I sold mine to an FHA buyer. I wouldn't do so again. It's one of those things if I had known then what I know now.........

The problem is you can't sell your house as is. Before FHA will grant the loan there are certain things that must be done. We had a house built in 1941 and we worked on fixing some things but it still needed some work. We had to redo the concrete on top of the chimmney (it was cracked and could allow water in which would weken the chimmney). We had to do some work on the septic system. We also had to do ALOT of painting. You can't have any paint that's cracked,. We ended up repainting the outside of the house. Luckily it was brick so it was only the trim but is was still a big job. We had partially upgraded wiring. Previously **** and tube and someone prior to us had installed a circuit breaker box. So some was done some was not.

It probably only cost us a 1000 dollars to fix everything but alot of time to get everything fixed and painted.

Good Luck Shawn

t-15 firefighter

That is one of the things I've done. Hopefully that will take care of the electrical portion of the appraisal. The house has no peeling paint on the inside or outside. In fact I repainted the house back in May so that should be okay. It is all of the unknowns that has me worried.

Thanks once again for all of your suggestions. I knew you guys would be a wealth of knowledge.

Britt

IA_James

This is Mrs_IA_James answering here. I am a real estate agent and atleast 50% of the homes I sell are to first time home owners using FHA lending. They are not as bad as they have been made out to be on here.. First of all, if they have switched on you from a Conventional loan to an FHA loan without giving you an addendum to the offer you can back out from the deal if you don't want to deal with it. Second, if you are ok with the FHA, have them write you an addendum stating the change in financing and a dollar amount that THEY are willing to spend to make repairs. DO NOT do the repairs yourself. You are selling this in "as is" condition.

The main things that an FHA appraiser is going to look at is bare wood that should be painted. (Siding, barns, etc... Yes they will make you paint a barn) All stairs will have to have a handrail atleast on one side. They are very picky about gutters. Must have gutters and down spouts. If you have a crawl space they may require a plastic lining. Cracked windows will need to be replaced. As far as the electrical, just wait and see. Again, this is stuff that the BUYER needs to be paying for, NOT you.

I have never had an appraiser comment on moisture in the basement unless there is a visible fault (cracks, etc..) I know of at least one closing that I had that had wires sicking out of the walls and VERY old electrical. The FHA appraiser did not say anything about it. I've also never had one make any comments about insulation, but that is subject to change. In my experience they require a smoke detector on each floor, not in every room, but that could be different from state to state. (Keep in mind this varies from inspector to inspector and may be different in each state.)

Hope this help, sorry for the lengthy explaination. If you have anymore questions, just post it and my hubby will let me know.