Why a regular buyer can't always buy your house

Good to know first: you don't need to do any of this to ask us for a number, and a title company handles the closing paperwork. This page is here if you want the background.

What an FHA appraiser looks for

We read FHA's handbook because it's public and specific. Conventional and VA loans have their own rules, which we didn't read, so don't apply this to every buyer. A few things that can stop an FHA loan:

The rules aren't a demand for perfection. Required repairs are limited to safety, security and soundness, marketability, and occupant health, and minor deferred maintenance can be appraised as is. So a dated kitchen and worn carpet generally won't kill a loan. Don't assume you need a cash buyer because your house is ugly. Any local agent can give you a read.

Roof and foundation

These are the two repairs that scare owners most, and they play out differently.

Roof: the test is mostly about moisture and remaining life, under the handbook's roof rule. A roofer's written opinion can tell you how close you are. If the roof is the only thing standing between you and a normal sale, replacing it may pay for itself. It's worth pricing before you give up on listing.

Foundation: an FHA appraiser reports ground movement as a hazard. On the Wisconsin side, the condition report asks about cracks, seepage, and bulges. Not every crack is structural, and we aren't engineers. If you've been told it is structural, get that from a structural engineer in writing, and keep the report to hand to buyers.

The workaround: rehab loans

FHA's 203(k) loan lets a buyer finance the house and its rehab in one loan, with Standard and Limited versions. The repair money sits in escrow and is released as work gets done. So a loan-backed buyer isn't always impossible, but the paperwork asks more of everyone and not every buyer will try it. If you're listing a rough house, ask your agent how often it comes up locally.

Lead paint in old housing

Most of the Twin Ports' housing is old enough to raise the question. The Census shows 42.8 percent of Duluth units built in 1939 or earlier, and 35.6 percent in Superior. Lead paint isn't only a financing matter. Federal law has its own disclosure rule for most homes built before 1978.

So who is left?

• Cash buyers who plan to live there. They're out there, and an agent can find them. They may pay more than an investor.
• Rehab-loan buyers. Good price, but slower and less certain.
• Local handy buyers and landlords. Your agent or your neighbors might know one.
• Companies like ours. We buy with no bank involved, so an appraiser's rules don't decide the deal. We also have to pay for the work and leave room to make the numbers work, so our number will often be below what a fixed-up house would bring.

Fewer buyers usually means a lower price, however you sell. That's the honest cost of the condition, and it isn't a trick anyone is playing on you. Run the three routes before you decide.