Selling home - ignore VA and FHA offers?

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michaeljc70
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Selling home - ignore VA and FHA offers?

Post by michaeljc70 »

My parents are selling their parent's home and they are ignoring offers that are using VA or FHA financing. I believe this is based on dated/false information. They already have a pretty good offer after 3 days from someone using an FHA loan. The house is in good condition but is being sold as is. According to my father, and this is based on a family member selling a property 50 years ago, "they make you fix every little thing". I sent an article debunking that and he said "they make you pay 6% closing costs".

When I looked it up (for FHA), they make the buyer OR seller fix certain kind of important items like wires hanging out of the wall, peeling lead paint, etc. I read that the seller CAN pay UP TO 6% of closing costs. This is not a requirement. Are there legitimate reasons to ignore FHA/VA offers?

Since they are basically ignoring me based on what I believe is dated information, I am thinking of just telling them to consult with their realtors who have probably dealt with thousands of offers/closing using FHA/VA loans.
Stoic9
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Re: Selling home - ignore VA and FHA offers?

Post by Stoic9 »

Just sold our house last month through a VA loan. We had two offers the first day for above asking price. We took the VA over a conventional. I knew it was not the 'best financial' decision as they were going 100% loan on above asking (possible appraisal) price. Being a Veteran and having used VA twice before I understood the difficulty of VA loans (most RE agents and loan assistants do not). We did end up delaying closing 3 days but not for VA reasons. We met the buyers for the first time at closing. Elderly couple, he said his wife fell in love with our house the first time she stepped inside. He said he noticed I was a Vet also, VA never had us fix anything but then we wouldn't own/sell a house that wasn't well maintained. VA loans are a cross between trying to protect our veterans and typical government red tape regulations that hinder the process.
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galawdawg
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Re: Selling home - ignore VA and FHA offers?

Post by galawdawg »

michaeljc70 wrote: Mon Sep 07, 2020 5:25 am My parents are selling their parent's home and they are ignoring offers that are using VA or FHA financing. I believe this is based on dated/false information. They already have a pretty good offer after 3 days from someone using an FHA loan. The house is in good condition but is being sold as is. According to my father, and this is based on a family member selling a property 50 years ago, "they make you fix every little thing". I sent an article debunking that and he said "they make you pay 6% closing costs".

When I looked it up (for FHA), they make the buyer OR seller fix certain kind of important items like wires hanging out of the wall, peeling lead paint, etc. I read that the seller CAN pay UP TO 6% of closing costs. This is not a requirement. Are there legitimate reasons to ignore FHA/VA offers?

Since they are basically ignoring me based on what I believe is dated information, I am thinking of just telling them to consult with their realtors who have probably dealt with thousands of offers/closing using FHA/VA loans.
Wouldn't their realtor presumably already be doing that? After all, isn't it their realtor who presented them the FHA offer?

Plus, the risk of cajoling your parents into accepting a FHA offer when they aren't comfortable with that is that the FHA inspection does indeed reveal repairs that must be made before the loan closes. For example, what if there is a previously unnoticed roof leak into the attic and inspection reveals three layers of roofing material? According to the roof requirements section of the FHA Appraisal and Property Requirements, "FHA will accept a maximum of 3 layers of existing roofing. If more than 2 layers exist and repair is necessary, then all old roofing must be removed as part of the re-roofing." (emphasis added)

You made your pitch, perhaps now you might just let your parents make the decisions that they are comfortable with.
whereskyle
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Re: Selling home - ignore VA and FHA offers?

Post by whereskyle »

michaeljc70 wrote: Mon Sep 07, 2020 5:25 am My parents are selling their parent's home and they are ignoring offers that are using VA or FHA financing. I believe this is based on dated/false information. They already have a pretty good offer after 3 days from someone using an FHA loan. The house is in good condition but is being sold as is. According to my father, and this is based on a family member selling a property 50 years ago, "they make you fix every little thing". I sent an article debunking that and he said "they make you pay 6% closing costs".

When I looked it up (for FHA), they make the buyer OR seller fix certain kind of important items like wires hanging out of the wall, peeling lead paint, etc. I read that the seller CAN pay UP TO 6% of closing costs. This is not a requirement. Are there legitimate reasons to ignore FHA/VA offers?

Since they are basically ignoring me based on what I believe is dated information, I am thinking of just telling them to consult with their realtors who have probably dealt with thousands of offers/closing using FHA/VA loans.
No, if the home can pass inspection, FHA should not be an issue, especially not for a savvy mortgage broker who knows the system and can deal with underwriters. For the record, mortgagees like FHA loans, and the loans are very popular with buyers. Permanent PMI is guaranteed extra cash. Just like always, everyone will be trying to make the deal work.

If I were selling, I'd recognize that plenty of offers will come in the form of VA or FHA, and I would not differentiate between them (unless my house could not pass an FHA inspection of course).
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle
vested1
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Re: Selling home - ignore VA and FHA offers?

Post by vested1 »

We faced this same dilemma in May of 2019 when we sold our home of 25 years. We had five immediate offers, the lowest of which was full price. Our realtor had wanted to list it 20k below what I had insisted on, but I prevailed. We accepted and closed on a offer that was 10k over asking, which had a loan where the buyer was putting down 60% and could have purchased with cash. We entered a 45 day escrow 1 week after listing.

We rejected an offer that was 20k over asking because it was a VA loan. This bothered me a bit because I'm a vet, but in retrospect I think the decision was prudent. We spent 11k fixing every lingering problem I knew about, 90% of which wasn't required. There was one issue with one location of water damage to an eave that I fixed cosmetically and which I found when painting the exterior of the house for sale, but I was uncomfortable with that fix. That water at the eave had to be coming from somewhere. There was another that involved past water intrusion at a window seal which I believed that I permanently fixed but which could have been an issue with the VA.

Our realtor told me that I had gone above and beyond what was required and advised me not to pursue perfection. We disclosed both of these issues, revealing the exact location of each, which didn't dissuade the buyer who had his own inspection done as well. A VA inspection would have required that both issues be further investigated and fixed, if needed, before the loan was approved. This would have meant finding the source of the water damage on the eave which was my main concern, and opening the wall at the window seal. There was 10 years on the 30 year roof, which was in great shape due to mild winters and a temperate climate. The VA borrower was incredulous when we rejected the offer of 20k over asking.

We offered, without being asked, a 1 year home warranty from the highest rated company which the buyer refused to take, saying he would purchase his own. We rented back the home for 1 month after closing to pack and ship our belongings and to clean the house after it was empty. The new owner never came over and refused the payment of rent. :confused
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jfn111
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Re: Selling home - ignore VA and FHA offers?

Post by jfn111 »

Any good real estate agent can walk through a home and tell you if it will meet FHA and VA requirements. The inspectors aren't walking through the home with a magnifying glass. They are looking for peeling paint (if built before 1978), broken windows, hand rails on stairs and glaring saftey issues.
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michaeljc70
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Re: Selling home - ignore VA and FHA offers?

Post by michaeljc70 »

galawdawg wrote: Mon Sep 07, 2020 6:09 am
michaeljc70 wrote: Mon Sep 07, 2020 5:25 am My parents are selling their parent's home and they are ignoring offers that are using VA or FHA financing. I believe this is based on dated/false information. They already have a pretty good offer after 3 days from someone using an FHA loan. The house is in good condition but is being sold as is. According to my father, and this is based on a family member selling a property 50 years ago, "they make you fix every little thing". I sent an article debunking that and he said "they make you pay 6% closing costs".

When I looked it up (for FHA), they make the buyer OR seller fix certain kind of important items like wires hanging out of the wall, peeling lead paint, etc. I read that the seller CAN pay UP TO 6% of closing costs. This is not a requirement. Are there legitimate reasons to ignore FHA/VA offers?

Since they are basically ignoring me based on what I believe is dated information, I am thinking of just telling them to consult with their realtors who have probably dealt with thousands of offers/closing using FHA/VA loans.
Wouldn't their realtor presumably already be doing that? After all, isn't it their realtor who presented them the FHA offer?

Plus, the risk of cajoling your parents into accepting a FHA offer when they aren't comfortable with that is that the FHA inspection does indeed reveal repairs that must be made before the loan closes. For example, what if there is a previously unnoticed roof leak into the attic and inspection reveals three layers of roofing material? According to the roof requirements section of the FHA Appraisal and Property Requirements, "FHA will accept a maximum of 3 layers of existing roofing. If more than 2 layers exist and repair is necessary, then all old roofing must be removed as part of the re-roofing." (emphasis added)

You made your pitch, perhaps now you might just let your parents make the decisions that they are comfortable with.
My father (who has a strong personality) told them they didn't want offers that were using FHA/VA loans, but I believe the realtor is still required to present them legally.

You're probably right and I'll just let it be. I think their discomfort stems from outdated information though. I think they think they will get 20 more offers that aren't FHA/VA...maybe they will...maybe they won't.
Soon2BXProgrammer
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Re: Selling home - ignore VA and FHA offers?

Post by Soon2BXProgrammer »

michaeljc70 wrote: Mon Sep 07, 2020 5:25 am My parents are selling their parent's home and they are ignoring offers that are using VA or FHA financing. I believe this is based on dated/false information. They already have a pretty good offer after 3 days from someone using an FHA loan. The house is in good condition but is being sold as is. According to my father, and this is based on a family member selling a property 50 years ago, "they make you fix every little thing". I sent an article debunking that and he said "they make you pay 6% closing costs".

When I looked it up (for FHA), they make the buyer OR seller fix certain kind of important items like wires hanging out of the wall, peeling lead paint, etc. I read that the seller CAN pay UP TO 6% of closing costs. This is not a requirement. Are there legitimate reasons to ignore FHA/VA offers?

Since they are basically ignoring me based on what I believe is dated information, I am thinking of just telling them to consult with their realtors who have probably dealt with thousands of offers/closing using FHA/VA loans.
if the house is in decent/good condition with "working systems" (Does the hvac work? Does the roof work? does the plumbing work?) then at least VA shouldn't be a problem.

Note, there is interpretation with "work". Example: a kitchen faucet that provides water, but at a reduced but usable flow, due to old galvanized pipes will pass the VA inspection... It should be written up by a private home inspector though for negotiation/remediation.

The VA tells its buyers that its inspection does not replace a home inspector because they just want to make sure they aren't going to lose money if the buyer stops paying and the insurance fund kicks in to make the lender whole.

On the other hand a 60/70's house with aluminum wiring WITHOUT the correct adapters at every plug/light while working, will not be passed by the VA because its a safety issue. The VA would want the adapters on every outlet/light before closing, they won't allow money to be negotiated for safety issues.. However, that might be throw away work, because a buyer might plan to remediate and re-wire the whole house at some point, per their private inspection report.

(this is from a combination of experience and anecdotal stories from others with experience (both buy/sell) with VA loans)
Last edited by Soon2BXProgrammer on Mon Sep 07, 2020 10:09 am, edited 3 times in total.
J295
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Re: Selling home - ignore VA and FHA offers?

Post by J295 »

You have provided your perspectives. Now time to stand down and support your parents.
oldlongbeard
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Re: Selling home - ignore VA and FHA offers?

Post by oldlongbeard »

We accepted an offer from a buyer using a Government program. Never again. Fairly recently. Think "Government Shutdown", and imagine the worst timing possible. I'll say it again. NEVER. AGAIN.
Hope it all works out great for you folks, no matter what. Stressful times, go easy on your folks.

Regards,
Greg in West Mitten
adamthesmythe
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Re: Selling home - ignore VA and FHA offers?

Post by adamthesmythe »

I think it is best not to "tell" parents anything, except perhaps the current time, or maybe the weather outside.
Topic Author
michaeljc70
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Re: Selling home - ignore VA and FHA offers?

Post by michaeljc70 »

adamthesmythe wrote: Mon Sep 07, 2020 12:01 pm I think it is best not to "tell" parents anything, except perhaps the current time, or maybe the weather outside.
Sorry for trying to help them out since they have sold less real estate in 50 years than I have in 10 years. :oops: I come from a family where we give each other advice and communicate freely.

Tell (transitive verb)
communicate information, facts, or news to someone in spoken or written words.
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