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Outbuildings and Old Garages Might Be in FHA Repair Requirements
A prime example of an FHA repair requirement
I’ve got a real pickle coming up soon with a new listing in Sacramento because it’s likely to sell to a buyer obtaining an FHA loan. Why is that a pickle, you might wonder? Well, back when cash investors were quickly snapping up every home that came on the market, real estate agents didn’t much worry about FHA repair requirements, but that’s not the case anymore. FHA loans are a big deal now because the investors have pretty much left the market.
The investors who remain won’t pay market value. They hit prices hard. I’ve yet to see an offer lately from an investor at or above the list price. They are all trying to grind. It makes you want to say whoa, thanks for driving up the prices, now stop trying to drive them down. Most sellers would rather sell a home to an owner occupant anyway. They don’t want to change the demographics of their neighborhood by moving in tenants. They want a first-time home buyer to purchase their home and love it as much as they did. Homes are very emotional vehicles.
Selling to a first-time home buyer means dealing with FHA (or VA) appraisers and being on the lookout for the types of items that could cause FHA repair requirements noted on the appraisal as a condition to fund the loan. Sure, FHA has guidelines for its repair requirements, but it’s also largely left to the appraiser, and not every appraiser shares the same opinion nor interpretation of the guidelines. An item one appraiser will note, another might miss or overlook or just not care about. It can be the luck of the draw.
The time to discover whether a repair is called out is not a few days before closing, though. It’s much better to be proactive and take care of this stuff beforehand. One item I am seeing pop up more often on repair requirements is an old outbuilding. That old storage shed or garage in the back yard that nobody uses and is rotting in the sun? Huge problem today. It most likely needs to be demolished and removed.
While meeting with sellers in Sacramento yesterday, I walked the property line with them. They had talked with several other agents and discussed whether the fences needed repair as a few boards were old. Turns out the other real estate agents were so busy staring at the fences that not one had pointed out the dilapidated garage. This big white elephant sitting in front of their faces. This is a structure that several decades ago was accessed by a long driveway, which no longer exists. The driveway does not exist because the lot was split. Today, the new garage is attached to the home.
This means not only is there no access to this old garage, but a person can’t so much as squeeze a small bulldozer into the yard, There is no way to get into the back yard, even by removing a fence. And the building has to go. Hello sledgehammer and wheelbarrow. Yet, another reason why working with an experienced Sacramento real estate agent is a huge benefit to a sellers.
About Health and Safety Issues in a Sacramento Home Inspection
Those dreaded words for a home buyer after a home inspection — Health and Safety Issues — could mean life or death or it could mean federal regulation, get out of my face. The people who freak out over health and safety issues probably do not adhere to the 5-second rule. You know, if you drop a piece of food on the floor, you’ve got 5 seconds to pick it up and eat it before it becomes contaminated.
For example, an ungrounded receptacle into which a lamp is plugged is most likely not going to explode or burn down the house. Sometimes, people replace ungrounded receptacles with 3-prong receptacles, which are still ungrounded if attached to the same wiring. You can even find instances in which a homeowner has piggy-backed the neutral to make it appear grounded when a home inspector’s tester is plugged into the socket. In my own home, built in 1948, I have pulled Romex from the electrical box to new outlets for our electronic equipment, but I do not lose sleep over a lamp plugged into an ungrounded receptacle.
I have a healthy respect for electricity. After all, I am a person who once, by accident, stuck a fork into a receptacle when I was a kid. Then, after the shock wore off, I wasn’t really sure what had happened, so, just to be sure, I inserted said fork back into the receptacle. It’s a miracle I am alive today. Don’t ever do this.
A really good home inspector can explain the issues to a home buyer because, believe it or not, most agents are not certified home inspectors and don’t want to engage in conversations about this. The liability is too great. Yet, home buyers need help to understand a home inspection.
I’m a little jaded, I suppose, because I’ve worked on my own investment homes over the years and there’s not much I can’t do in the arena of home repair and maintenance. I can put on a roof, install a fireplace, cut holes in the ceiling for skylights, build a garage, finish off a lower level shell, all with my own two hands and aching back. Unless a home is sliding off its foundation or sinking into the ground, most defects can be fixed and are not necessarily a huge deal.
We recently had an escrow in which the buyers were terrified that the door to the garage was not fireproof. Notwithstanding the fact the home was built in the 1960s and hasn’t yet burned to the ground. They wanted the seller to install a fireproof door because their FHA appraiser noted it in the appraisal. This happened to be a short sale, which is sold AS IS. We had explained to the buyers that any repairs they wanted needed to be completed at their own expense, but somehow those words didn’t sink in, and when they spotted Health and Safety Issues in the home inspection, they became even more freaked out over it.
Agents get freaked out, too, but generally for a different reason than buyers. They don’t want to get sued. They know that a raised sidewalk is a trip hazard and could be called a Health and Safety Issue. They also know that if you can’t look where you’re walking, then don’t step off the curb and text; moreover, you should probably go home and lock yourself in the bathroom because you’re too inept to walk in the world among the rest of us.
Fortunately, the buyers finally came to their senses in that escrow and installed their own fireproof door in the garage. We closed yesterday, and the seller was ecstatic.
When a buyer purchases an older home, there will always be Health and Safety Issues because codes and regulations continually change. These “issues” probably not exist as a code when the home was built. Are they gonna kill you? Probably only if you don’t eat it in 5 seconds. Ask your home inspector.
