Real NEastate: Did my mother get a raw deal in accepting an FHA buyer?

Q: My mother is selling her house in Rhawnhurst and her real estate agent told her that she didn’t need to do any repairs and could sell it “as-is.” She signed a contract with a buyer who agreed not to request any repairs. But now the buyer’s mortgage company says she needs to do repairs. It’s just a couple minor things, but that wasn’t the deal she agreed to! Can she get out of this contract?

A: If the home buyer’s mortgage lender is asking for repairs it’s more than likely because they are getting an FHA mortgage. FHA loans are low interest rate loans necessary for buyers who have less than 5 percent to put down on a house. If this home buyer is getting an FHA mortgage then there is a place in the Agreement of Sale that will indicate so. You will also see language that says the mortgage lender may require repairs, so unless that language was crossed out, your mother probably did agree to this deal. An FHA mortgage is insured by the Federal Housing Administration against loss by a lender in the event of a default of a borrower. In order for a home buyer to qualify for an FHA mortgage, the Federal Housing Administration requires an appraisal of the property. FHA guidelines require the house to be in good condition and has a general “checklist” of items required, such as railings, GFCI outlets, un-chipped paint, etc.

If she refuses to do the repairs then the lender won’t agree to fund the loan and your mother would lose this pending sale over those few minor repairs. Abandoning this sale, however, does not guarantee that the next offer, if there is one, won’t also be an FHA mortgage home buyer. If she decides she does not want to accept any FHA buyers then you’re narrowing potential home buyers down to a small group that have more than 5 percent of the price of the house to put down and actually wants to buy a house in Rhawnhurst that won’t have any repairs done.

Right now your mother has a signed deal with a home buyer that isn’t asking anything more than what the mortgage lender is requiring. In my opinion, you should just do the minor repairs for your mother, or hire someone to do it, and let her get on with the sale of her house. Otherwise, your mother could be looking at an incredibly long wait for the right buyer, who may not actually materialize.

Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.