Working It Out OK with the FHA

Dear Pat,
We’re about to put our house on the market but we’re leery about accepting an FHA offer because of all the repair work the FHA requires.  Can’t we just sell say that we don’t want to take an FHA offer?  We don’t have a lot of cash, and we’re already…
Overworked 

Dear Overs,
Sure, you can refuse to accept an offer that includes FHA financing.  But you think you’re overworked now?  Picture the time when you’re actually on the market: before leaving for work, you have to make sure the kids toys are picked up and put away, beds made, dishes washed, the dog brought to the neighbor’s house, lights all turned on, the whole place vacuumed and dusted and polished and shined—everyday. On weekends and evenings you have to be ready to do all the above at an hour’s notice for showings, plus grab the kids and go someplace and wait until the showing is over.  This goes on until the house sells or the showings finally drop to nothing as interest drops away.  Do you want to prolong this process, possibly for months, because you refuse to look at an FHA offer?  Most houses in our area sell using FHA financing—it’s the only way for the majority of buyers to afford a house. 

Fact is, the FHA isn’t really all that hard on sellers these days.  The actual “work orders” that are sometimes required are usually pretty simple:  mainly health and safety items such as peeling paint or broken windows.  Occasionally a handrail must be added to basement stairs, or a dangerously small electrical box replaced, or roof shingles replaced if leaking around a chimney flashing—but these are very rare calls.  Most sellers should be completely aware of these concerns after the city Truth-in-Sale-of-Housing inspection, and should plan accordingly.   In today’s buyer’s market, all sellers should have their houses in good order, free of peeling paint and broken windows. 

So if you’re with me on this, Overs, here’s how to proceed when you get an FHA offer:  the financing page will state how much money you are willing to spend to repair the house if required by the lender.  The amount is negotiable, and often can range from zero to $1500.  Let’s say you’ve agreed to $500 and the contract is sent to the lender, who requires the garage and some of the house trim to be scraped and painted.  If you can’t find a painter to do all the work for $500, you can do all or the extra part of the work yourself, or you can ask the buyer to do the extra (many buyers are happy to do this, to both preserve the deal and to make sure the job is done to their satisfaction).  The above is one simple example; in real life Real Estate the problems and their solutions will be as varied as the houses on the market.   But two things are certain: (1) if you want to sell your house as quickly as possible, you need to open yourself to the entire market by agreeing to sell FHA, and (2) it’s not FHA requirements that make or break a transaction—rather, it’s the willingness of the parties involved to cooperate.

So roll up your shirtsleeves one more time, Overworkers, and look over your castle for the conditions I’ve mentioned before you go on the market.  When the inevitable FHA offer comes in, negotiate a reasonable amount for work orders, pledge your cooperation and expect the same from the buyer.  This is how it all works out OK with the FHA.  Good luck!