It used to be that there was a long list of things that had to be repaired before closing by the seller in order for a buyer to get a loan on the property. That list included things like missing handrails, leaky faucets, cracked window glass, defective floor finishes or coverings and trip hazards to name a few.
At the end of 2005, however, the Department of Housing and Urban Development announced a change in policy. That change still requires appraisers to report any readily observable deficiencies in the property. However, the only time repairs will have to be made prior to closing is when there is a condition that affects the structural soundness of the property or which jeopardizes the health and safety of the occupants. A couple of automatic "must-fix" conditions include defective paint surfaces in structures built before 1978 (that's when they banned lead-based paint), leaking or worn-out roofs and inadequate entrances and exits.
If you are selling a home and you think that repairs might be an issue, you might want to ask your real estate agent if they know any lenders who do
FHA 203(k) or Streamline 203(k) loans. Since those loans allow the buyer to make repairs after closing and require the lender to make sure that the repairs are made, the condition of the property at closing is not an issue. If your agents lets people know that there is renovation money available, a buyer who sees your listing and sees that they can finance repairs and upgrades might just find it more attractive as a result.
Answer Submitted on Wed, Jun 25 2008
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