Skip To Content

FHA Financing Obstacles

Why might FHA financing offers be turning sellers away from your offer? FHA financing is a great way to make an offer on your dream home, however, it might be turning sellers away from your offer. To understand the issue, we need to look at it from a sellers perspective.

The seller gets an offer from a conventional loan type buyer and an FHA loan type buyer that comes with hurdles. Those hurdles include that the FHA loan requires that an FHA appraiser goes out and inspects the property. This is over and above the traditional home inspection that the buyer gets. The buyer goes through a normal home inspection, they negotiate repairs, then a week or two later the FHA appraiser goes out and inspects the property and they may come up with additional issues the seller has to repair in order for the loan to be approved. The conventional buyer does not have that hurdle. A conventional or cash buyer can waive the appraisal contingency up front and the seller will not be required to make repairs specifically required by an appraiser. The second issue with FHA financing is that is comes down to the price the FHA appraiser gives. The cash or conventional buyer can also waive this appraisal contingency. In today’s market where homes are being aggressively priced, it is not uncommon for a house to be appraised lower than the contract price.

It might be more appealing to the seller to choose the buyer that can waive the appraisal contingency. Sometimes sellers even perceive that FHA buyers are not as well equipped to buy as they are only putting 3% down whereas a conventional type buyer might be putting 10% or 20% down. If you are an FHA buyer and you do have additional funds, it might work to your advantage to let the listing agent know to see if you can pay for a repair yourself and work out a deal to help you win the home. These are some of the issues that sellers face when receiving offers so it is beneficial to qualify to conventional loan type to help you win the deal. If you need help buying or selling, give me a call and take the smoother road to sold.

Trackback from your site.

Leave a Reply