FHA, and buying a home.

FHA, and buying a home.

Let me cut right to the facts here.  If you're a FHA buyer, you may find "winning" the perfect home might be challenging.  Yes, FHA is an awesome program for first time buyers.  They require a VERY low down payment, and seem to cater to those of us on a VERY tight budget.  But remember, how a "Buyer" see's FHA is VERY different than how a "Seller" see's FHA.

From the Sellers perspective, Government programs such as FHA can be a nightmare.  While I can go on and on about the details, I sum it up this way...  What Government programs "Aren't" a pain for those administering it...?  Inspections are more demanding.  Appraisals are scrutinized deeper.  Sellers will often accept an FHA offer, after all other offers (Cash/Conventional) are exhausted.

I'm working with a client who has great credit, solid job, but is a FHA buyer.  The market in AZ is competitive once again, so there are more Buyers, than Sellers.  We've put MULTIPLE offers in on homes, and each time we've been overlooked.  It's frustrating for my Buyer, since from his position he's a catch.  From the Sellers perspective, they want to see more offers (preferably non-FHA).

I spoke to one Seller, who was currently going through a nightmare over a FHA situation.  He had entered into a contract with a FHA Buyer for a agreed upon price.  They had an appraisal done, which matched the selling price.  The Buyer went to the bank, and was told a second appraisal needed to be done.  A new FHA requirement.  To top it off, the Seller was asked to pay for it.

Needless to say, the deal fell through...

The story doesn't stop there.  A second FHA buyer entered the picture, and since the first deal was FHA, the second appraisal was still required.  This appraisal came in WAY lower than the first, crippling the Seller.

As you're guessing, this was the last time this Seller agreed to a FHA deal.  It's not the Buyers fault, but they're paying the price.

My advise if you're a FHA Buyer?  Walk into EVERY deal understanding the Sellers motivation.  Whether it be an investor selling a flip, or a Seller trying to short sale their home.  If you're FHA, you WILL be looked at differently, making it VERY important your offer (and negotiations) are competitive from the start.  Look @ EVERY deal from the perspective of the Seller.

If you had two offers on your table.  One was a CASH deal (no paperwork, simple), and the other was a FHA (Government complex) loan, which one would you pick?  If you were willing to pick the FHA Buyer, why?  What would it take "for you" to make the deal too good to pass up?  Approach it from this mind set, and you'll have better luck.