Great news! Your lender pre-approved you for an FHA loan with a surprisingly high limit. You don’t really know what FHA means, but you are excited to sign papers and lock down that charming fixer across town. Having been approved for well over asking, you feel confident.
Not so fast. The property is listed “as-is.”
“As-is” means the seller will not make any fixes or repairs.
Fine, you think. I’m handy. I’ll do the fixes myself.
You write an offer that is immediately accepted (Yay!) A few days later, your lender sends a HUD- approved appraiser to assess the value and condition of the home. This is where things can get complicated. If the HUD appraiser finds certain issues with the home, they will report these back to your lender. Your lender will inform you that all repairs must be made, or else they will not issue the loan.
But wait… if the seller won’t make repairs, what can be done? It’s up to you, the buyer, to either pay for the repairs or forfeit the deal. And if the home must close within a few weeks, you might run out of time and be out of luck.
A savvy seller will see this potential roadblock when they read “FHA” in your financing contingency. It’s likely they wouldn’t accept your offer in the first place.