From your experience....

4 Replies

my question is do FHA appraisals more conservative than conventional mortgages? Here is my dilemma? I have a condo flip that we have listed last week and we have an offer. the issue that I am going to run into is that all the properties in ghe complex, that have sold in the last 2 years were all distressed. 3 foreclosures, and another 1 was an arms length transaction that was aunt selling to niece. Finally, my purchase which was a short sale and now listed for sale. all units sold between $105-123k. I did a complete cosmetic rehab. new bath and kitchen, paint, flooring and recessed lighting. I listed at $175k and there is another condo listed for $159k that only has new paint and appliances, the $159k condo started at $169 and had an offer for $163k, but the sale fell through since there HOA has a rental restriction. I received an offer for $160k and need to counter. it seems like it will be hard to appraise at $160k so for asking for anymore would be wishful thinking. but there is the possibility the property may appraise out. to make matters worse they will be financing with FHA type loan. I know I am trying to push the market but from your experiance, do FHA loans come in tighter than standard loans? Thanks for any feedback.

@Ravi P. FHA versus Fannie/Freddie is no indication of value. FHA does not mean the value will come in any lower. However - to do an FHA loan in a condo building, the entire building must be approved by FHA. Is that the case for your building?

Jeff Dulla, Lender in IL (#031.0024775), CO (#100055471), FL (#LO24291), IN (#19621), MI (#207322), MN (#MN-MLO-207322), and WI (#600802)
(708) 531-8322
Originally posted by @Ravi P.:
my question is do FHA appraisals more conservative than conventional mortgages?

Here is my dilemma?

I have a condo flip that we have listed last week and we have an offer. the issue that I am going to run into is that all the properties in ghe complex, that have sold in the last 2 years were all distressed. 3 foreclosures, and another 1 was an arms length transaction that was aunt selling to niece. Finally, my purchase which was a short sale and now listed for sale. all units sold between $105-123k. I did a complete cosmetic rehab. new bath and kitchen, paint, flooring and recessed lighting.

I listed at $175k and there is another condo listed for $159k that only has new paint and appliances, the $159k condo started at $169 and had an offer for $163k, but the sale fell through since there HOA has a rental restriction.

I received an offer for $160k and need to counter. it seems like it will be hard to appraise at $160k so for asking for anymore would be wishful thinking. but there is the possibility the property may appraise out. to make matters worse they will be financing with FHA type loan. I know I am trying to push the market but from your experiance, do FHA loans come in tighter than standard loans?

Thanks for any feedback.

For appraised value, FHA aren't really different in terms of opinion of value. The data is there or it isn't.

FHA's anti-flip rule is what's more likely to get you.

Chris Mason, Lender in CA (#1220177) and California (#1220177)
415-846-9211

Hey Ravi P. !

I think @Jeff Dulla and @Chris Mason brought up some great points that you should really look into. In my market, the seller has to have held the investment property for longer than 90 days in order for it to qualify for FHA.

I think the answer to your question is: it shouldn’t. An appraisal is an estimate of value and how a buyer is financing the property should not affect the value.

That said, most real estate professionals will give you their own opinion based off of their own experiences and down here it is pretty common to see sellers prefer conventional loans over FHA/VA.

I’m really curious what your ARV was for this property before purchasing it and how you got to a list price of $175,000

Gabe Amedee, Real Estate Agent in Florida (#3388321)

Thanks guys market will determine what the house is worth. @Jeff dulula, @Chris mason, @Gabe Amadee. 

As for ARV

105k PP

16K Reno labor, materials, appliances

7K holding cost (HOA, Mort, RE taxes)

128K all in

I came up with 175K based on another property for sale 159k and made adjustments for improvements I made that they do not have.  

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