I keep hearing of homes that cannot be financed through traditional means due to condition deficiencies like broken windows, non-functioning kitchen, no running water, etc. These are examples but is there an actual list of condition issues that make a house not worthy of financing (in Fannie Mae guidelines for example) or is this nebulous territory? I would like to be able to tell a seller with authority of such specific conditions to give me the upper hand in negotiations.
Your list is sufficient to get the point across that a seller has certain problems.
I suggest that you don't confuse them with regs and codes or try to impress them with quoting the FHA specs. A confused mind says NO!
Just share with them your experiences and the limitations that the lack of financing means to a seller. Show them what a comp means and how most buyers at the low end don't have cash unless they're investors who expect a bargain or a buyer who will purchase on terms.
Turn lemons into lemonade by offering an exit plan for their purchase money note(s) if they wish to cash out.
Generally the home needs to be in at least average or better condition for conventional, FHA is very strict on everything. Of course all this really comes down to the appraiser. If they don't take a picture or mention it, the lender will never know. For example chipped paint on the outside is ok with conventional, but not FHA due to lead paint concerns. Think in terms of the lenders eyes, is the home in a condition that it would sell quickly and you could get market value if you un-willingly owned it?
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