buying a property FHA loan and me the buyer responsible for any repairs

[johnsrt4]

Ok let's just start by saying home buying has become way more stressful then ever before. OK I have a few questions I'm hoping this community of a appraisers can help me awnser. The property I am buying the owner is just trying to break even on. He agreed to pay 6% closing costs. But will not pay for any repairs to make the place FHA a proved unless I she'll out another 10k. So we came to a agreement on asking price I do repairs if needed. I have a clause that if it goes over 2500 I can back out. This property is in Pennsylvania if that helps.

First issue I noticed that will probably be caught on the appraisal. Two out buildings garage and shed. The shed has t1-11 siding rotting at the bottom of the shed all four sides. So if this is brought up would a suitable repair be to run a 1x6 or a 2x6 around the bottom as trim and paint it? Or would it be better to use tin or some kind of aluminum flashing? Would this be accepted on a reinspection? The garage out building has the same rotting but only on the back side all other sides are tin.

OK inside problems I noticed. Electric box is 100amp but it is a older push button type system. Will this require updating? Also there is a bare wire hanging out one of the walls in the basement not sure if it's live or not? Is it acceptable to just cap the wires or do they need capped and put in to a conjunction box?

In side basement walls. The house is over 100 years old the basement walls are old stone most of the part and some have been stuccoed or some sort of plaster on them. At spots there is chunks of plaster that broke off will this be a issue? I think these are all the issues that stuck out to me. Also is it a problem if I do the work myself or do I need to use a contractor? Was planning on doing my self to keep costs down. Thanks to any response in advance.

 

[Ken B]

My only question would be if, after you do all the work, the current owner refuses to close the deal, what are you going to do?

Stranger things have happened.

 

[redfish]

Maybe a FHA 203k would be a better option if purchasing a property in its "as-is" condition as it sounds like you must, unless you make repairs prior to close.

 

[Meandering]

Ok let's just start by saying home buying has become way more stressful then ever before. OK I have a few questions I'm hoping this community of a appraisers can help me awnser. The property I am buying the owner is just trying to break even on.

Many areas of PA are still distressed markets, so we can't get involved with break-evens, or lose-money, or make-money. Time is money and appraisals are good only for a specific date.

He agreed to pay 6% closing costs. But will not pay for any repairs to make the place FHA a proved unless I she'll out another 10k.

Are you applying for an FHA loan? If so, a 203k or streamline loan should cover the repairs.

So we came to a agreement on asking price I do repairs if needed. I have a clause that if it goes over 2500 I can back out. This property is in Pennsylvania if that helps.

First issue I noticed that will probably be caught on the appraisal. Two out buildings garage and shed. The shed has t1-11 siding rotting at the bottom of the shed all four sides. So if this is brought up would a suitable repair be to run a 1x6 or a 2x6 around the bottom as trim and paint it?
Or would it be better to use tin or some kind of aluminum flashing? Would this be accepted on a reinspection? The garage out building has the same rotting but only on the back side all other sides are tin

Depends. FHA wants us to report all wood to ground contact, but it's up to underwriters to decide to lend on a property that has wood to ground contact. Metal might be a fix, but it would depend on the quality of workmanship for me, and, It would more depend on the quality of the shed, but it might work.

OK inside problems I noticed. Electric box is 100amp but it is a older push button type system. Will this require updating?

It would for me if there were an electric clothes dryer, electric stove, electric hot water heater, baseboard heating units. 200 amps is generally what banks want to see. Along with old electric goes old electric outlets, check them too.

Also there is a bare wire hanging out one of the walls in the basement not sure if it's live or not? Is it acceptable to just cap the wires or do they need capped and put in to a conjunction box?

Put in a box, or we'll require an electrical inspection to know if it's live. No capped wires hanging around, box them.

In side basement walls. The house is over 100 years old the basement walls are old stone most of the part and some have been stuccoed or some sort of plaster on them.

This was commonly done when concrete blocks became available. Parging stone walls to make them look like they were concrete was popular in the '20s and 30s in my area. Gave those stone walls a more "modern" look for the times.

At spots there is chunks of plaster that broke off will this be a issue?

Yes if the parge is painted. You can not have a lick of peeling paint, anywhere, inside, outside, or any missing painted places like this.


I think these are all the issues that stuck out to me. Also is it a problem if I do the work myself or do I need to use a contractor? Was planning on doing my self to keep costs down. Thanks to any response in advance.

Suggest you do the work after you purchase, not before you purchase. If you get a 203k loan, you will need a contractor.

After you do the work, the home will be "worth more" than if the work is not done. Be carefull not to get blindsided by the seller.

.

 

[Terrel L. Shields]

There are times to look elsewhere. This may be one of them.

 

[Tony Bamert]

First off the 6% will be a problem because FHA will typically not allow anything over 3% for a seller contribution. Check with your loan officer before you do anything. 2nd, FHA does not mandate who does the repairs, only that they get done prior to closing. As a good rule of thumb, FHA and "fixer upper" should never be used in the same sentence...That is not the idea of the program.

As for the repairs, any siding will do. FHA has no cosmetic components. Orange carpet, purple counters, not a problem as long as they are in satisfactory condition. Any flaking paint will have to be cured on any surface, inside, outside, garage, shed, fence, it does not matter. The same goes for any rotted wood/siding. The only exception would be exterior treated lumber designed not to be painted. exposed wiring must be fixed, wirenunts and a covered junction box are fine. If there are lot of electrical items, the appraiser may call for an inspection by an electrician. Two prong outlets near a sink are a common repair as well in older houses. look for that. 100 Amp is usually fine as long as its reasonable for the house. i.e. if its a 5000 square foot house, 100 amp is not ok.. The plastering on the basement walls is called parging and its common in many older houses. If its flaking or turning to powder, yes, that is a problem. There can be no flaking or peeling paint, plaster, drywall, etc, particularly if the house predates 1978. Exposed stone is fine, flaking is not.... Good luck...