Recent Rural Development Loan

We represented a buyer who bought a home in Fairfax on a Rural Development (RD) loan. She was able to finance 100% of the purchase price AND get closing costs from the sellers. Keep in mind that all negotiations are specific to a property and that a sales price is specific to what a seller will sell a house for and a buyer will pay for the house.

The buyer and seller agreed on the price, terms and conditions. We did a building inspection and there were minor repairs that needed to be done. But the house had one major problem that we knew ahead of time would come up in the appraisal. In RD loans, safety is all-important. This house had a sliding glass door to... nowhere. I mean, it was to somewhere, and that somewhere was an eight foot drop. There used to be a deck there, but now there wasn't.

We determined from the lender that if the seller put up an adequate barrier, that would suffice. The seller put up an attractive lattice barrier but it was not high enough. A carpenter put in a board at the top of the slider and screwed it in place. That door was not opening.

The bank hires an appraiser to determine the value of the house for the bank and to also evaluate the condition. He was satisfied with the sliding door repair.

What did not satisfy him was the vinyl in the kitchen that was torn and missing in areas. He did not like the leaking sink in the bathroom, and he wanted GFCI outlets in the kitchen and bathroom. He especially didn't like the peeling paint on the exterior. We understood the electrical repairs and leaky sink. The appropriate tradespeople were hired and the repairs were made. The seller reluctantly scraped and painted the outside. But the missing vinyl? The buyer was going to replace the entire floor as soon as she closed on the house, so she didn't want to spend money repairing missing vinyl.

The solution that worked for everyone was a bit ridiculous: the ripped pieces were cut out so there were missing 12x12" square areas. The completely missing areas were trimmed neatly to make open square areas. Then peel and stick 12x12" tiles were put in the missing spots. The main color of the kitchen floor was yellow so they put in yellow peel and stick tiles. Unfortunately, they ran out before finishing. So, we stuck in black tiles! Black and yellow tiles -- it looked like the Yellow Brick Road! Ugly, but the appraiser was satisfied.

In an RD loan, the appraiser is not only appraising the property for value compared to recent sales and other properties on the market, but is creating a report indicating what repairs must be done to satisfy the lender. The buyer gets a safe house and the lender knows the house has gone through stringent requirements. But sometimes the requests seem ridiculous, like covering the openings in the kitchen floor in this house.

We are happy that RD loans exist. In this case, the buyer did not have enough for an FHA downpayment which is 3.5% and she did not have sufficient cash for closing. The buyer and sellers came to agreement on price, terms and conditions that worked for everyone. The buyer is thrilled with her new home and the sellers loved that she loved the home they had owned for years.

Even if she moved in with a yellow and black kitchen floor.