FHA Inspection - A Sham?
By Steve Gillman - 2011
In order for a home buyer to get an FHA loan guarantee, the
seller must submit his house to an FHA inspection. This much
I understood when we received an offer on our old house. I also
knew that this was not always an easy process. I had heard the
stories...
In theory the FHA inspection does a couple things. By looking
for problems and then requiring they be corrected, the inspector
assures a lender that the home provides safe collateral for the
loan. The process is also supposed to protect the buyer. Since
buyers who use low-down-payment FHA loans often have little in
the way of savings, they don't want to have any big expensive
repairs to do after buying a house.
Our house was inspected, and the report came back, along with
the actions we had to take to pass the next inspection. Ignored
were the sagging floors of the 111-year-old house. Ignored too,
was the lack of proper wiring in half of the home. The old heater
that radiated heat out from the center of the home without ducts
was not a problem, even though it won't be long before insurance
companies refuse to insure homes with these ancient units. The
lack of an exhaust fan in the bathroom was okay because of the
window--even though that opened into another room (old houses
are funny that way). Multiple layers of old shingles on the roof
pass the inspection.
What was listed as in need of correction was a lack of venting
for what passed as a crawl space under the home. It was a $40
fix with the help of a neighbor. All exterior trim with loose
paint needed to be touched up too--another $40. The biggest item
was the white picket fence, which had to be painted.
Now, it's worth noting here that an old wooden fence with
some peeling paint is not a safety issue, nor an immediate concern
for the new buyer. In fact, as our real estate agent pointed
out, we could just tear the fence down, since a fence is not
required for an FHA loan. If there is a fence, though, it can
have no peeling paint. We paid to have it painted.
The second inspection was done and a new problem came up.
The paint that was scraped off the old fence was scattered in
the dirt and grass, and had to all be cleaned up. There was no
suggestion that the old white paint chips were dangerous, but
I was starting to see that the process was more about making
it look like there is a process than about safety issues or even
financial concern for the buyer.
We dug out hundreds of pounds of dirt. We raked. We dug more.
The house finally passed the FHA inspection and the deal was
done.
Looking back on this it occurred to me that this is all "real
estate theater." Everyone is working to make it look like
they are doing something important, but in the end they don't
want to actually get in the way of the deal. We spent only a
couple hundred dollars to meet the requirements. The lender was
no safer for the new paint on an old rotting fence. The buyer
is going to face a major roofing job soon and will likely not
have the money. But we all went through the motions and closed
the deal.
What good is an FHA inspection? I have no idea. It seems like
an incredible waste of time and money.
|
