Great forum - Thank you.
My question as a Realtor… if a FHA loan is needed for 100% financing, will it go through if the seller has started remodeling and is now selling but did not finish:
trimming the new windows inside, missing drywall over insulation of an addition, walls and ceiling, added new wiring for new lighting but no fixtures? We can rule these costs into the loan but there will be no repair done prior to the closing. Any advice? Thank you very much
I’d say not it’s not likely to pass, especially with the missing light fixtures, but FHA compliance is outside the scope of most home inspections.
It’s even tougher now that there’s no hard and fast list of rules that the FHA appraisers use.
I think it’s written now as “any condition deemed undesirable by the appraiser” or something like that. So I guess it depends on what kind of day they’re having when they come to do their walk-through.
There are FHA requirements that a home must meet and there are home inspectors who are qualified by FHA to provide an inspection report regarding that home’s condition as applied to those requirements.
The inspector makes his report. The bank, seller and buyer will come to an understanding.
It is unlikely that an inspector will report that the home you described is fit for occupancy in its current condition and this will likely interfere with a lender’s desire to finance it.
- It’s not an inspectors job to issue a certificate of occupancy. Also, the missing items being in an unfinished addition would likely not affect the rest of the house.
- There’s a MINIMUM set of requirements that a home must meet, but most appraisers have an additional list of items they consider to be undesirable. It’s still very subjective.
I am aware of the FHA requirements (type in my last name) and what inspectors do and do not provide. Many (but not all) home inspectors are qualified to provide these inspections.
I did not mention any “certificate of occupancy” in my post and I am not sure why you did.
Banks, not inspectors, determine whether loans are approved. Rarely will a bank issue a loan on a house that fails to meet FHA standards, however, and a home that cannot be occupied will rarely meet those standards.
I mentioned it because you’ve alluded in both your posts that’s it’s the inspector’s job to judge whether or not the house is fit for occupancy and I think that’s outside the scope of an inspector to determine.
I also already knew that you were an FHA approved inspector, but you have yet to show me a link to an absolute set of rules that govern you as an FHA Inspector. A list in other words, like a USDA Rural Development loan inspection checklist. As far as I know, such a thing used to exist, but no longer does. I’ve seen the minimum standards, but they’re written in a way that’s very much open to interpretation by the FHA inspector are they not?
I feel an appraiser would the best one to help determine this.
Appraisers are doing more and more detailed inspection reports to show to “their” lenders and banks. Sad that most of them are not trained, educated, or have any insurance requirements that most all inspectors have. All lenders and banks should use caution when trusting appraiser reports on home defects or occupancy requirements.