Lender Required Repairs on a Home In Detroit

If you applied for a Fair Housing Administration (FHA) loan to buy a property, here are the FHA lender required repairs that you need to carry out in a certain time frame:

• Downspouts that are unpainted and rain gutters that are broken
• Peeling paint
• Outbuildings that are already rotting
• Doors that don’t open and close properly
• Exposed junction box and faulty wiring
• Leaks and plumbing issues
• Non-functioning HVAC systems
• Damaged or leaky roofs
• Roofs that only last for three years
• Pest infestations
• Rotting support columns, eaves, and window sills
• Missing appliances that are typically sold with the home, ex. stove, air conditioning, water heater
• Structural issues
• Wet or flooded basements
• Standing water present in the crawl space
• Kitchen appliances that aren’t working
• Unusable pools
• Ripped screens
• Broken or leaning fences
• Code violations involving a converted garage

The Veterans Affairs (VA) loan requires repairs that are centered on the structural soundness, security, and safety of a property. Here are some of the VA lender required repairs tagged as Minimum Property Requirements:

• The home’s mechanical systems should be safe and in working order
• There should be adequate roofing and heating
• There should be no exposed wiring
• Basements and crawl spaces should be dry
• No fungus growth, termites, and dry rot
• Lead-based paint should be removed

Conventional loans aren’t supported or provided by the government. Typically, these loans come from credit unions, banks, mortgage firms, and other private lenders.

Because there’s no government involvement, traditional lenders usually have fewer stringent repair demands compared to VA or FHA requirements.

However, most traditional lenders may still ask for substantial repairs post-home inspection, like replacing roofs, addressing fire and water damage, and preventing mold.

In the typical real estate scene, buyers often wield more sway when it comes to negotiations. They may ask the seller to handle all the fixes demanded by the lender, along with any extra repairs, especially if the property’s price seems inflated compared to its true market worth, as determined by the appraisal.

To maximize their profit, many sellers require repairs to be shouldered by their buyers. When a buyer refuses, they let the sale fall through and wait for another buyer to step up and pay for the lender required repairs. This is most common in a seller’s market.

If the buyer and vendor want to reach a middle ground or neither holds significant bargaining power, they’ll share the expense of repairs mandated by the lender.

For example, the vendor may cover the expense of redirecting pipes for improved water flow, while the buyer would be responsible for the cost of remedying and cleaning a moldy closet.

Most buyers depend on a loan when buying a home, so they don’t really have the cash to deal with lender required repairs.

If this is the case, the seller may take care of the lender’s required repairs and increase the selling price of the property. This way, the buyer won’t have to pay repair fees with cash but through the financing of the lender or loan company.

If it is decided that the seller would pay for the lender required repairs, but doesn’t want to use his earnest money to pay for it upfront, the buyer can pay in the meantime and ask the seller to lower the selling price of the home.

In other words, the cost of lender required repairs is deducted from the sale proceeds.

This is the final and likely least desirable option. If the buyer and seller can’t agree on who will cover the repairs needed by the lender, the sale will collapse. If that occurs, all the negotiating time and effort will be for nothing. However, it will give the seller a chance to seek out another buyer who may be willing to cover the lender-required repairs.