Lender Required Repairs on Conventional?

Question

We're currently under contract to purchase a property for $65k.  We're using a conventional loan on it so we're putting down 20%.  No issues so far.

The appraisal came back at $75k with a few "lender required repairs" listed such as flooring and mold/mildew.  Both of these things we've already planned on fixing and budgeted in our rehab.

Has anyone seen lender required repairs on a conventional loan before? I've seen it on VA/FHA, but not conventional.

Our options at this point are for the seller to remedy the issues, us to remedy the issues (before we even close because we can't close until the repairs are made), or back out of the contract (we do have a clause in there that covers this). We don't want to back out as we were planning on doing the repairs anyways, but I still have a natural hesitation on completing repairs on a house I don't own because we haven't closed yet.

Wayne Brooks · Answer

Yes, conventional have minimum condition standards just like fha, only not as strict.....common knowledge for any experienced agent.

Guifre Mora · Answer

I really don't understand what you are trying to gain with this post on BP, it needs to be fixed period if both realtors don't know what to do its because they are inexperienced or unwilling to move a finger and that's what they are getting paid for to get it done. Both of the realtors should be getting it fixed to clear the inspection. Have them earn their pay. He'll have one of their handymen fix it in 1 day. Be done with it put it to bed or walk away.

Allan C. · Answer

@Matt Brown. Yes, I’ve come across repair requests on conventional loans for safety and health related items.

Wayne Brooks · Answer

@Marian Smith Not what you’re talking about regarding the “20% down is to cover selling costs, repairs....).  The house had to meet certain standards, period. The 20% down gives some cushion to the lender for foreclosing and trying to be made whole, the buyer has more skin the game do less likely to readily default, etc.

Marian Smith · Answer

@Matt Brown  Interesting.  I have always thought the 20% down took care of 10% selling costs plus a 10% cushion to replace pet pee carpet, purple paint, etc at resale.  With covid they are probably looking at that second 10% as a hedge against market decline and want the property condition to meet minimums.  They probably don’t want you moving in as is without minimum rehab and no money because they have seen what conditions people live in when they get back reo photos.

I have taken photos to show tree limbs pruned to get insurance, so maybe you can find out if you can clean (like you said, tilex mold and a Clorox wipe) then use a photograph for the mold issue.  Then maybe show the price and estimated quantity of the proposed flooring and place the money in escrow...or even order the flooring and photograph the order receipt.   They want the loan, too.

Matt Brown · Answer

@Guifre Mora

Unfortunately it is an as-is sale (estate sale). We knew condition wasn't great beforehand hence we were already planning on doing that work. Appraisal wasn't too clear on it anyways, said mildew around the tub, that's a Clorox wipe fix! (We're replacing the tub altogether though)

Guifre Mora · Answer

Then both realtors need to earn their commission and make it happen, seller need to fix it get an extension have the seller make up for the trouble.

Matt Brown · Answer

@Guifre Mora I've no doubt that it is accurate. However, the lender, and both the listing and buyers agents have never heard of this and really don't know what to do.

Guifre Mora · Answer

Has anyone seen lender required repairs on a conventional loan before? Yes, this is accurate.

Lender Required Repairs on Conventional?

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