Hey Bigger Pockets Community,
I am running into the issue where I find properties through my analysis that I am interested in, but the seller is not accepting FHA loans from buyers. I have 2 questions regarding this:
1. Why does it matter to the seller whether I have an FHA or Conventional loan?
2. What can I do to mitigate the situation other than trying to switch to a conventional loan?
Any and all thoughts would be appreciated!
1. FHA there is a longer closing time (usually at least 45 days), there are also mandatory FHA inspections. Most buyers don't want the extra time and to fix whatever issues that FHA inspection brings about. 3.5% down subjectively some sellers don't like as much since less skin in the game.
2. Need a lender who can guarantee you lowest time possible for closing. Get rid of as many contingencies as possible. More $ down or over list
1) fha has stricter property condition requirements
2) most people use fha because they can’t qualify for conventional….meaning their finances/credit/income may be marginal which means a greater chance they won’t qualify.
@Ryan DiCanio I agree with the previous comments, but let me give you an example as a realtor. I have an FHA buyer that I got into a deal on a great home by going $25000 over asking, and I believed it was worth that much. The house appraised at value, however the appraisal came back with the following requirements—fix the cement on some stairs, either reside or tear down a shed in the backyard, and prove the well and septic are far enough apart. My buyer and her family went and took care of the shed and steps themselves. Despite the septic being a newly installed, and county approved system, that I did send in the county approval for, we had to gather additional documentation and send it in for a FHA waiver which has a 10 day processing time. So a deal that was supposed to close the first week of this month, likely won't close until the beginning of next month. One of the longest delayed closings I've ever had on a buyer deal I've done. Thankful the seller and buyer are some of the sweetest people ever!
The seller probably knows the property won't qualify for an FHA loan.