The last year in the real estate market has not been a difficult one for sellers.  Most homes are selling in a matter of days, and most sellers are receiving offers with conventional loans.  Even cash offers became a new norm for awhile.  

Once the market begins to settle down to a more normal, and some may say reasonable pace.  FHA buyers will, more than likely, will begin to reenter the market.  If we go back five years to the late summer and early autumn of 2017, 26% of homes in York county sold using an FHA Loan.  Over the last year or two that number decreased to around 12-13% of York County sold homes using an FHA Loan.  However, many believe that this trend will change and FHA will again become a popular form of financing.  Many sellers hear FHA and begin to think of stringet inspections, laborious repairs, and a prolonged closing date.  These can all be true, but before you begin quoting the palace guard from the Emerald City, in the Wixard of Oz, and adimately state, "NOT NO WAY, NOT NO HOW," when presented with an FHA Loan, let's take a look at the details of the loan.

FHA loans are insured by the Federal Housing Administration, they require a credit score of 640, or depending on the lender perhaps a little lower.  (Some real estate blogs will say 580; however, I am not aware of any lender in York county that will go that low.)  The buyer is required to pay a 3.5% down payment. FHA loans will typically require 45 days to go to closing. The FHA Loan allows a buyer to request from the seller up to 6% of the sale price of the home to assist the buyer in covering their closing costs and downpayment. 

So if you sell your home for $250,000 accepting an FHA loan the buyer can request up to $15,000 from your proceeds to help cover their costs.

$250,000 * 0.06 = $15,000

This is the dreaded "Seller's Assistance," that many sellers, understandably, want to avoid with these loans.

Here is the good news.  At the moment, we are still in a market in which, if I am working with a buyer with an FHA loan, I strongly advise them to not ask for the full amount, unless they absolutely need it, and I think most agents would do the same.

The second portion of the FHA loan that concerns sellers is the appraisal and repair requirements that are attached to these loans.  FHA requires a move in ready home, with all electrical, plumbing, heating, painting, and roofing issues remedied before the loan can receive final approval.  One of the biggest issues is that there can be no signs of cracking, chipping, or peeling paint.

Many sellers do not want to make these repairs.  I can appreciate that; however, let's consider this for just a moment.  If we were to put in your listing that you will only accept conventional loans or cash, as we move toward a more normalized market, where approximately 25% of buyers are using the FHA Loan, we have just eliminated one in four buyers from considering your home.  The more buyers seeing your home the better it is for you.  More buyers mean more competition, maybe more offers, and perhaps a price over the original asking number.

I would suggest we take a look at your home, and see what you might need to do inorder for an FHA loan to be accepted.  Then you must decide what amount is worth it to pay for any repairs.  Using our $250,000 sales price example, what if it costs you 1% of that to do the necessary repairs.  That might be a small price to pay for bringing more buyers to showings and an open house, and the potential of more offers on the table.

Also, consider that if it is something serious, flashing or fascia damaged or missing, loose shingles, water heater not working properly, serious plumbing or electrical issues, furnace not heating properly, A buyer with a conventional loan may be asking for those repairs, or a reduction in price. 

Certainly there is a place for the realization that there is just too much to do, and we should forgo the FHA considerations, but with more buyers entering the market with this financing it is wise for a seller to consider accepting this type of loan.