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I ran into someone today who has a 610 sq ft home in Southern California...1 bd, 1 bath. He stated that he cannot sell the house since no one can get a loan for a house with that low amount of square footage. It is only worth about 175k to 200k based on slightly larger property comps. Of course, if someone has cash I am sure it is no problem, but the seller indicated that a buyer would not be able to secure financing for a purchase. the crazy thing is that the current owner purchased the home 8 years ago with no problems.
Anyone aware of this? Is this a behind the scenes agreement with lenders or is this a guideline from FHA? If anyone can shed some light on this, that would be great. This is a single residence on a 4,000 square foot lot, not a condo. Thanks all!!
He's probably right, unless there are other 610 sq. ft. homes that can be used as comparables. The problem would be the adjustments with nearby homes would be beyond the scope allowed on the secondary market. In other words, you can't compare this home with a 1500 sq. ft. home, well over 2 times the subject's size.
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