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Old 06-20-2012, 04:59 PM
 
37 posts, read 143,979 times
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Hi everyone,

I received an offer on my house from a buyer who will be putting 20% down, but have not signed the contract in a week because they are being difficult in wanting credits, etc. to try and lower the price a little more. Today, I just received a second offer on my home for a little more money, but the buyer is applying for an FHA loan with 5% down. As a seller, can dealing with a buyer/FHA mortgage be a horror story. Why do some sellers refuse buyers who go the FHA route?

I need to have my decision by tomorrow...help!

Thanks,
EM
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Old 06-20-2012, 06:52 PM
 
Location: El Dorado Hills, CA
3,670 posts, read 7,972,766 times
Reputation: 3748
FHA has more requirements for the house to qualify for lending than conventional. Some of the things here that cause problems are wood rot, "health and safety issues" which could include a dog door between house and garage, and any issues with the HOA.

Also, conventional buyers tend to have a higher down payment...and therefore might have better credit and a better chance of getting final approval.

If you buyer has 5% down and offering more money (price and closing costs/credits net) then it is probably viable. Make sure you see the pre-approval along with verification of funds to close before making a choice. Also, have your agent tell the other buyer you have received another strong offer and you're not willing to make any concessions. Sign (there should be a deadline) or you will move on.

Good luck with it. And ask your agent for input on how to proceed, that's more important than what I or anyone here says.
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Old 06-20-2012, 07:42 PM
 
37 posts, read 143,979 times
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Thanks for your reply...I did find out that the FHA buyer does have a very high credit score and I did see their pre-approval, which was for 75,000 more than what they are paying for our house. Also, we did tell the original buyers' attorney that we rec'd a stronger offer and that we would not expect his clients to come up in price, we only wanted them to back off with wanting the credits (which amounted to $3,000) and they said no.

My concern with FHA was if we, as sellers, could run into problems.

Thanks,
EM
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Old 06-20-2012, 10:14 PM
 
Location: Phoenix AZ
5,920 posts, read 10,437,079 times
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Quote:
Originally Posted by oteyjoe View Post
Thanks for your reply...I did find out that the FHA buyer does have a very high credit score and I did see their pre-approval, which was for 75,000 more than what they are paying for our house. Also, we did tell the original buyers' attorney that we rec'd a stronger offer and that we would not expect his clients to come up in price, we only wanted them to back off with wanting the credits (which amounted to $3,000) and they said no.

My concern with FHA was if we, as sellers, could run into problems.

Thanks,
EM
FHA loan requirements are about health & safety - sometimes those definitions are twisted by the appraiser or the bank in bizarre ways- a broken garage door spring held up my own closing a couple of weeks. If any of your first offer conditions were safety related, get them fixed & take offer #2. Your agent should be able to help pinpoint some of the most obvious issues that kink FHA deals.
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Old 06-21-2012, 05:42 AM
 
107 posts, read 354,320 times
Reputation: 71
We just purchased a house with an FHA loan. Getting final loan approval took about 45 days, instead of the typical 30 days for a conventional loan. As far as selling a house to an FHA buyer, you are not putting yourself at any greater risk than if you sold to a buyer with a conventional loan.

Good luck!
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Old 06-21-2012, 06:31 AM
 
Location: Philaburbia
31,152 posts, read 57,274,608 times
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Quote:
Originally Posted by oteyjoe View Post
My concern with FHA was if we, as sellers, could run into problems.
Shouldn't be a big deal unless you've been deferring maintenance. When I sold my house to an FHA buyer, I had to replace a few standard outlets with GFCI outlets (which the inspector when I bought the house 13 years beforehand had suggested, LOL), fix a few loose shower tiles, and have the furnace inspected for a suspected gas leak.

I'd had a sale fall through with a conventional-loan buyer, and their laundry list after their inspection included incredibly stupid stuff like repainting the living room because trim at the corners was chipped. I was thrilled to have an FHA buyer!
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Old 06-21-2012, 08:19 AM
 
Location: El Dorado Hills, CA
3,670 posts, read 7,972,766 times
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I don't know the exact stats, but I think about 85% of current mortgages being originated are FHA. So it's not like someone can't get a loan with FHA. It just might add a hiccup or two.
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Old 06-22-2012, 07:32 AM
 
4,542 posts, read 11,542,319 times
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The odds of a minimum down FHA loan failing to get final approval are a lot higher than a 20% down conventional.
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Old 06-22-2012, 08:20 AM
 
Location: Londonderry, NH
41,505 posts, read 49,538,721 times
Reputation: 24548
Where the money comes from is not your concern. Take it an run.
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Old 06-22-2012, 10:04 AM
 
107 posts, read 354,320 times
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Quote:
Originally Posted by GregW View Post
Where the money comes from is not your concern. Take it an run.
I agree. Go with the highest offer and the least whiny buyer.
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