There is a perceived hierarchy of Buyers when buying a house
The examples below are what we typically we see, but all Buyers and situations are different
These are deemed the lowest risk as they typical remove the appraisal and loan contingencies in the contract so Earnest money would be non-refundable sooner. They can usually quicker to close but can sometimes offer lower contract prices.
This is probably the average Buyer. Their loans are seen as ‘less complicated’ and Buyers usually have more of a down payment. If they are putting a higher down payment, sometimes the Lender will waive the appraisal meaning one less contingency to worry about
FHA and VA (Veterans)
With these types of loan, they are Government backed, so they do have stricter rules than a conventional loan. Don’t let this put you off; As with any deal you don’t know what the Appraiser’s opinion as they can be so subjective. But as a seller you need to be aware of the following:-
The Appraisals are stricter and requires the home to pass their ‘Health and Safety’ standards. What an appraiser will check for is:-
* Inspect the property’s interior and exterior structure and quality
* Ensure lead-based paint is not present
* Check for cracks, leaks, and damage to the exterior
* Walls and ceilings in good condition without cracks or holes
* Check quality of fixtures, plumbing, and appliances
* Make note of any upgrades that may increase the value
* Ensure the Landscape is in good condition
* Check central heating and cooling systems
* Take photos of the front, sides and back of the home. Along with photos of any upgrades that increase the homes value
Likewise when an FHA appraisal has been done on a property, it ‘sticks’ to the property for 6 months. So if it came in low, and the buyers and sellers weren’t willing to agree to an outcome, you could not sell to another FHA buyer for 6 months. If it did come in low, your options are
* Seller agrees to reduce the price to the Appraisal price
* The Buyers agree to bring the difference in additional funds
* Seller and buyer agree to split 50/50
* No-one agrees and contract terminates.
All Appraisals are subjective and could be very different depending on how strict the Appraiser is. I have no way of knowing what they will do.
Also with FHA, if there is a question on the value of the property, but you think they might proceed, the buyer can still terminate all the way to closing and get Earnest money back. Please read section 6.2.2 of the Contract. These situations are rare, but it is important to point them out
While we do our best to vet the Buyers credentials and ability to perform to closing, until that ink is on the closing table, anything can happen. But that situation is rare.