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What are the pros and cons of buying a house using an FHA loan?

Plumbing problems found during inspection can we renegotiate with bank for help with repairs or reduced price?

  • We are in the process of buying a house. We have a contract on it, the house is a foreclosure owned by the bank, and we are using an FHA loan. We had the inspection this week and since the house was winterized we had a plumber come in to turn on the water. He went upstairs to check the pipes and came running back down, he had found that all of the pipes had burst because of the cold. Water was coming out of the lights in the ceiling and also was pouring directly into the basement on top of the furnace. The plumber said that it appeared that the pipes were either winterized wrong or that they had been winterized after the pipes had already frozen. Also the inspector told us that the outside of the house needs to be repainted in order to pass the FHA appraisal. We got an estimate for the painting, and it seems very high, over $5000 for a 1300 sq ft. 2 story home, and we got an estimate from the plumber today, it was $2900 (worst case). We are wondering if we have a chance negotiating these repairs with the bank. We were the only people to put in an offer on this house, and I kind of feel like it is in their best interest to work with us on this. We are not asking that they pay the entire bill, we are just asking for a little help paying for these 2 things. If we had the money to be able to just pay $5000 for a paint job and $3000 for plumbing we would probably be able to afford a better house that did not need this work. My feeling is that the bank would be better off dealing with us than trying to sell it again, because they would either have to lower the price or fix it anyway and we were, as I said, the only offer. What are our chances in getting a little help from the bank?

  • Answer:

    In most cases, with an FHA Appraiser; They will come out to do the appraisal and see the damage. In the market how it is, it is not uncommon for the appraisers to find houses with serious damage. Due to sitting empty these houses lack a caretaker and worse, vandals will take advantage and steal everything, including the kitchen sink. When the appraiser does the inspection they will ask for a Notice of Completion for the repairs. At that point you will be able to negotiate with the Seller or bank that owns the house. Most likely, if its bank owned, they would rather cover the repairs then have the house sitting on their portfolio. It sounds a lot more complicated as it is when you have the brokers, lender and Appraiser talking all that R.E. talk. Keep in mind as the Borrower and the Buyer you have a lot of power to negotiate the terms and conditions of your purchase. Make sure you are happy with your transaction and read your paperwork carefully. Good luck.

Geneviev... at Yahoo! Answers Visit the source

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You may be right, it is their best bet to work with you. However, foreclosures are the least of their priorities. They know they are going to lose money so they don't mind how long it sits there. I don't think they generally put money forward. But you can offer a lower bid. The house did not pass inspection so your original bid can be retracted. Also, I would check into the FHA rules. What is wrong with the paint? And make sure you get multiple bids on the plumbing. Use someone with good prices and good references. I know that is easier said than done. I bought a foreclosure. It had the same problem with pipes. It was not winterized. My plumber had to come back twice to fix his own mistakes. Ugh...

Tonya K

if you haven't closed the sell, go back and show the bank what the inspector found, and renegotiate the selling price.

cm4cm56973

Absolutely yes, ask. More than likely the listing says you are buying as is, but they may still consider repair required by the lender to secure your loan.

daniel r

Why are you asking us ? Ask the seller.

Vix T

Certainly you can ask the bank to reduce the price and in a way you can demand it. You may have a contract but you can't be forced to close. At worst you will lose your deposit and application fee. You might not even lose that if you stated in the contract "the contract is contingent on a satisfactory inspection" or "the contract is contingent on being able to obtain a mortgage" or similar words. Since at the moment it won't pass FHA inspection and wouldn't even qualify for an occupancy permit without repairs to the plumbing I think you have more than sufficient reason to escape your contract or have the bank reduce the price to pay for the needed work. In addition, now that the problems are known they would have to disclose them to any other potential buyer. As you pointed out, probably no one else would pay what you paid knowing what the house needs.

Howard L

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