Anything is Selling, But Not all Make it to Closing

We are all aware the housing market is still hot, and many properties are being sold having deferred maintenance. As a reminder, sold “As Is” does not mean mortgage companies need to lend on the property. They are not party to the sales contract, and neither are Fannie, Freddie, FHA, VA, or USDA. The Agency Appraisal guidelines apply regardless of an “As Is” contract. Here are some areas you can help your clients focus on to ensure the contract gets to closing:

• Peeling Paint: If you have a property with defective paint, please inform the selling and listing agent that the chipped, cracked and peeling paint needs to be repaired. The pictures which the agents get sent, or the appraiser’s list of repairs, might not cover everything. If the appraiser goes back and sees any chipped, cracked or peeling paint, chances are they are going to call for it to be repaired even if they did not require it in the first appraisal report. Best practice for agents is that ALL defective paint needs to be repaired whether it is on the original appraisal report or not!
• Pools: If the property has a pool and it is not visibly working, please have them cover the pool. FHA rules are quite different when the pool is covered versus when the pool is uncovered. Best practice—have the pool covered regardless of operating status.
• Final Inspections: Please make sure the required work is completed before the inspection is ordered. Mortgage lenders keep sending appraisers out to properties for final inspections only to see the work not complete. Often, the appraisers are overwhelmed yet some real estate professionals still push to order the Final Inspection hoping the work will be done before the appraiser gets to the property. The result is the buyers keep getting charged for multiple final inspections that the borrowers cannot always afford.

With housing inventory limited, and the demand for homes still on the rise, more properties are being sold with “issues” than ever before. As real estate professionals, it’s our job to stay ahead of the issues so these transactions can close.

About the Author: Rock Vaughan of Fidelity Direct Mortgage is a Mortgage Loan Officer with over thirty years of experience in the industry and is native to the Washington, DC metro area.

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