Are Home sellers wrong not wanting to consider FHA buyers?

Are Home sellers wrong not wanting to consider FHA buyers?

As a full time Real Estate Broker, I see Real Estate listings advertised in which seller only want to  consider Cash or Conventional buyers. Fearing that an FHA buyer would require to much effort and cost the seller money.

A recently closed short sale listing of mine had multiple contracts till it closed. The second buyer was going to obtain an FHA purchase mortgage. The FHA appraiser noted that the pool was very green and  not safe to use (unless you are a frog) and a broke kitchen light switch.

The Bank would not close in the loan unless the two issues were corrected. The buyer being a first time home buyer and having little experience with pool repair’s, canceled the contract.

The next buyer (and now the proud owner of the home), used a conventional lender/loan. The Conventional lender required the same items to be repaired. The Licensed Real Estate appraiser made a note of the issues on the first visit. Once repaired the appraiser make a quick re-inspection, and submitted a report to the lender for review.

FHA appraisals do vary from conventional appraisals. An FHA certified appraiser will know all variations. The main differences are safety and functions. FHA wants to see that there are no obvious hazards such as big holes in the yard that could lead to a trip and fall or metal rebar sticking up from a concert slab in the back yard. FHA appraisers are also check that all electrical and heating and cooling are functional. Meaning they should check all the stove burns, and all the lights turn on and off. But in no way does a FHA appraisal come close to a Home Inspection.

The broad definition of a Real Estate appraisal is the estimated value of Real Property at a given time. The FHA appraiser just takes a closer look to see if the major items of a property work and that there are no major obvious dangers or hazards present.  

In my professional opinion, if your home was built less than 20 years ago. And was fairly well maintained, you should have nothing more to fear from a FHA buyer than a Conventional buyer.

A property inspection will un-cover many more defect of a property than an appraiser, but that is a topic for another story.