Saturday, March 21, 2015

Water Heater Issue can slow FHA Loan

A common issue found during the home buying process is improper (or missing) water heater seismic straps.  

California has double-strapping requirements for water heaters. Knowing the requirements can help facilitate the selling process, especially when dealing with a Federal Housing Administration (FHA) insured loan.

The FHA requires that a home complies with local building codes and makes sure certain issues are addressed before the loan is approved. In earthquake-prone California, water heaters require seismic straps [braces or anchors] in the upper and lower 1/3rd of the tank to prevent displacement, health and fire hazards during movement.  

The FHA obtains an appraisal report from an approved home appraiser who also performs a basic inspection to make sure the home is habitable. If the appraiser reports improper seismic strapping, the FHA will place the loan on hold until it meets the requirements. Additionally, a seller is required to certify that standards have been met. This issue has slowed many buyers' FHA loans.

Sound complex?

Properly installing water heater seismic straps is quick, easy and inexpensive. 

Correctly double-strapping a water heater (as seen in the photo to the right) can be done professionally by a licensed plumber for about $120 - $150 in less than one business day. It is recommended that straps be heavy gauge metal, not plumber's tape as it's less resistant to severe movement.

Why is this important?

If you're looking to close the deal soon, taking care of issues like this helps expedite the sale. An appraiser will likely find this deficiency and report on it. And you (the seller) may be asked to correct the issue anyway.  Waiting to fix simple issues will only cause delays.

As a seller, you can have your home ready for the appraiser and make it faster to process a buyer's FHA loan. Even though a buyer will not always have an FHA loan, it's always wise for sellers to address simple issues before any delays or inconvenience arise. 

Taking proactive steps to address simple, but important, issues means a faster smoother transaction for everyone involved. 

It's important to note that an appraiser's role is not to inspect the home.  Sellers should still consider hiring a home inspector for a thorough pre-listing inspection to find concerns and help address issues quickly.

Follow this blog for more posts about issues relating to home inspections. Comment below if this story about addressing simple but important issues sounds all-too familiar, or if there is something else you'd like to share.