Important FHA & VA Home Loan Standards

Buyers with FHA (Federal Housing Administration) and VA (Veteran Administration)loans can't just buy any home. In an effort to protect their consumers, the FHA and VA have set criteria for the conditions of the homes that their buyers can purchase. They have specialized appraisers, who not only look at the comps and value of the home, but they also inspect the properties for safety and health hazards as well as other costly problems. In an effort to reduce wasting time and money, buyers should use a critical eye to take good look for some the following criteria:

Approved Condominium Complexes. If you are looking at condominiums, the complex must have been approved by the FHA or VA. Approved complexes are listed on the Department of Housing and Urban Development and Veteran Administration Websites. You may also find complexes on the website, that are not approved. It must show an active approval. If a complex approval has expired, the home owners' association has to reapply for the approval. Detached houses and Planned Unit Developments that have Home Owner Associations do not require approval.

Foundation Issues Cracked foundations (see photo) are a problem for any kind of loan. Things to look for are cracks in the stucco and drywall, difficulty opening and closing doors and windows, cracked floor tiles, and sloping floors.

Permanent Heat Source. The home must have an attached, built-in heat source that is turned on with a switch or knob. Wood burning stoves and fireplaces do not quality. A wall heater is approved.

Pools & Pool Equipment. Besides being filled, pools & equipment must be in good working order with no health hazards including algae and cloudy water.

Paint & Drywall Damage. If the house was built before 1978, peeling paint or damaged drywall/plaster (see photo) will need to be repaired.

Safety Hazards. Cosmetic issues are not concerns; however, safety issues such as electrical hazards, exposed wiring, broken windows, etc. need to be replaced or repaired.

Stove. The home must have a functioning stove (see photo). Buyers can purchase a stove and place in the home before close of escrow.

Unpermitted Additions. Garage conversions are probably the biggest culprits that will not be approved. While many Realtors believe no unpermitted additions will be approved, others claim it depends on the appraiser and the workmanship of the addition whether or not it will be approved. So if the buyer is willing to risk the cost of an appraisal, you may get a thumbs up.

Roofs. Worn roofs may be approved, but leaking roofs will not.

Termites. While a termite inspection is not always required, if there are obvious signs of termite damage and wood rot, then treatment or repair would be reqired.

While some of these problems can be addressed by the buyers prior to close of escrow, if they so desire, it is good to know what you are facing before making an offer. By keeping an eye out for these problems, buyers can avoid heart break and frustration.

Virginia Hall
ABR, CRS, e-Pro, GRI, SFR
Coldwell Banker Residential Brokerage
VirginiaHall.com
Direct (619)258-8585

Secrets to Winning in a Multiple Offer Bidding War

As you search around the streets, you may notice there are not as many homes up For Sale as usual. In some parts of San Diego you are right. For example, in Santee the total number of homes listed during the first quarter of the year declined 4%, compared to last year.

According to the California Association of Realtors, the number of homes for sale has been declining for the past 8 months. As the number of homes decline, the law of supply and demand kicks in leading to more multiple offers.

So what are the secrets to winning a bid on a home where there are multiple offers?

1. Use a Realtor®. Many think they can find properties online and don’t need help. But in truth, many of the property websites that consumers use have a 48-72 hour delay. A Realtor can locate new listings and represent you in the purchase of a home.

2. Don’t delay. When you find the right home, there will be other buyers out there feeling the same thing. Get your complete offer in as soon as possible. The offer must include a loan preapproval and the Proof of Funds.

3. Don’t low ball the property. Using the comparable properties prices, determine the fair market value and give your highest and best offer. If you are buying the home with a loan, the home will be appraised to make sure that you are not paying too much for the home. When the market prices are climbing, you can offer a little more than the comps. However, if you are too high, you may have to renegotiate the difference between the appraisal and your offer.

4. Factor in Closing Costs. If you need to have closing costs, you are best to bring up the price up to make up the difference. So at the end of the day, the seller still nets a fair price.

5. Include a letter explaining why you would make a better buyer. Some people include mini biographies with family or individual photos. Any information that might emotionally influence the seller to accept your offer over another will help your position.

With the use of these tips, hopefully you can succeed in a more competitive market and win the home of your dreams.

Virginia Hall
ABR, CRS, e-Pro, GRI, SFR
Coldwell Banker Residential Brokerage
VirginiaHall.com
Direct (619)258-8585