May 15, 2013
A reader asks, “I bought my home through FHA nearly 4 years ago. I now am selling and a buyer called and we agreed to sell to them. They are going with an FHA loan as well. At first they had my agent representing them. They somehow got their brother in law, who also is a real estate agent, to do the whole house inspection. He said that the stairs were wrong (10″ risers, no railing) He also stated that the roof in the garage needed to be jacked up and have more joists or whatever they are called and that he would do it.”
“He isn’t a certified inspector with FHA and I don’t know if he is even a true inspector. He didn’t report it, the buyers came out with him and stayed at my house for 4 hours…I do not know what to do about them because the house appraised for less than what they agreed to pay.They want me to bring the house down by $8,800, have my agent excuse himself as their agent so their brother in law can be their agent,say that he would then give me $5,500, that my agent should do the same and I can eat the rest of the money so they can get the house. I don’t think it is legal nor ethical! How can a contract be written to include this and protect me?”
FHA loans require an appraisal–not a home inspection–from a licensed, FHA approved appraiser. The loan will not be approved without this procedure, which MUST be carried out by someone with FHA approval. The home inspection is voluntary and paid for by the borrower, and the borrower is always within his or her rights to request one.
The inspection is NOT tied to the results of the appraisal in any way. The inspection is for the borrower’s information, the appraisal is for loan approval and to establish the fair market value of the property in order to set the FHA loan guaranty amount.
That said, a seller is not obligated to sell until he or she has signed a contract or legally binding agreement. There are two basic options a seller has in these cases–one is to contact the FHA directly and discuss the matter and get advice by calling 1-800 CALL FHA. The other is simply to refuse to sell the property if the seller is still legally within his or her rights to do so.
In any situation involving an FHA loan where a party to the loan suspects there is unusual, unethical or prohibited activity, it’s important to contact the FHA as soon as possible to discuss the situation.
In some cases a buyer or seller may need to have a nuance of FHA loan regulations or the Fair Housing Act explained to them, in others there may be a simple misunderstanding. In still other cases, there may be activity that requires enforcement of FHA regulations or Fair Housing Act law.
Contact the FHA directly for help in cases like these at 1-800 CALL FHA.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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