Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Dilbert

Real Estate Investing Real Estate Financing
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Posted by kathy lewis President Capstone Institute of Mortgage Finance on October 07, 1999 at 18:11:30:

A “For Sale by Owner” is allowed to sell his or her home financing FHA without a Realtor. FHA does, however, have certain disclosures that you are required to provide to the buyer. The buyer’s mortgage company should be able to provide these disclosures, or write me at my email and I’ll get them to you.

Closing costs on an FHA loan do not run more than closing costs on other types of loans, however some fees typically charged by the lender, such as an Underwriting Fee, Real Estate Tax Service Fee, Courier Fee, and Document Preparation fee, (called “non-allowable fees”)may not be paid by the borrower. If they are charged, the seller must pay.

On an FHA loan, the seller is permitted to pay up to 6% of the sales price for the borrower’s closing costs, discount points, and prepaids, plus the seller may pay the fees mentioned above that the borrower may not pay. You simply negotiate with your buyer exactly what you are willing to pay, and what you negotiate can include paying those “non-allowable” fees mentioned above. It’s all what you and your buyer agree to. Since most buyers have a problem coming up with the necessary money to close, you can simply negotiate a higher sales price, but apply the extra money built into the sales price toward as much of the buyer’s costs of closing at you wish. This gives you a tremendous advantage if you agree to pay as much of the buyer’s costs as possible.

REMEMBER: On an FHA loan, every $1,000 in a sales price equals $30.00 in a down payment. If you negotiate a sales price that is, say, $3,000-$4,000 higher than you would have been willing to accept (subject to the appraisal supporting the sales price), but apply that extra money to the buyer’s closing costs, discount points, prepaids, and “non-allowable fees” you make the same NET profit on the loan, the buyer saves $3,000-$4,000 out-of-pocket, AND YOU SELL YOUR HOUSE QUICKER! There are tons of ways to sell your home yourself. Contact me if you have questions.

Kathy Lewis

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Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Dilbert

Posted by Dilbert on March 24, 1999 at 24:31:05:

Is it possible for an owner to sell a property FHA without hiring a real estate agent? If so, how is something like this completed?

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Re: Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Mike-DFW

Posted by Mike-DFW on March 24, 1999 at 01:37:01:

I’m not sure what you are asking but will try to give you an answer.

To my knowledge the only time you must use a RE agent is when bidding on a HUD prop. A FSBO can accept whatever type of financing that they want to accept. If the price of the prop. is below FHA maximum for your area then you can get an FHA loan. If the price is over the max then you will have to pay the diff. in order to go FHA. The only thing the seller has to do with it is the sellers closing costs will be higher if they accept FHA financing as opposed to cash, or conventional loans.

Hope this answers your question.

Mike

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Re: Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Carol

Posted by Carol on March 24, 1999 at 07:02:14:

The bank doesn’t care if a realtor is involved… they need a contract. Again, we are assuming you are talking about a type of financing, not a type of property (HUD).

Call around to your local lenders, and find one you like. Get prequalified… but DON’T give out your SSN to 100 people to prequalify you … it messes up your score.
Once you’ve got a property under contract, a title company can do the rest … or you may use a RE atty.
Good luck
Carol

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Re: Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Dilbert

Posted by Dilbert on March 24, 1999 at 06:59:58:

Thanks for the response. You state that the “sellers closing cost are higher” if FHA financing is used, do you mean “buyer’s cost” instead? When FHA is used it also means no need for the seller to hold a note because total payout is done at closing, right?

One last question, what are the usual FHA requirements regarding the condition of the property it finances and the price limits for a particular area. This home is newly rehabbed.

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Re: Can a FSBO be sold as an FHA deal without a RE Agent - Posted by Mike-DFW

Posted by Mike-DFW on March 25, 1999 at 24:25:01:

Sellers closing costs are higher when a buyer goes with FHA financing. Depending on the lender there is a processing/underwriting fee of up to 600.00 associated with a FHA loan. This is charged to the seller normally. There are some other small fees that show up with FHA and VA loans that usually don’t show up on conventional or cash deals.

As for your last question, it depends on the lender. FHA has certain guidelines for new construction and other guidelines for existing houses. Call your lender/bank/mortgage broker and they can give you the guidelines for your area. I know FHA just raised the max loan limit here from 111k to 141k.

Mike