When we were in a seller's market, we put in the listing no VA or FHA loans, but it's tougher to do in a buyer's market. I also heard they were very sticky, especially with inspections and there are certain things that the seller must pay.

If I understand them correctly, they are a method for people to buy a home with a small downpayment. I don't understand why the people would have to use FHA when they're already selling a home.

I think it's fair that you counter at your listing price since they made it contingent on their house selling. It does look promising since it's under contract, but I know you are leary given the curse you've suffered with two other offers falling through.

Give them a choice:
1. List price with home sale contingency
or
2. Go down by 2% without home sale contingency. Give them the choice.

It shows you're meeting them halfway, but also that you plan to keep the house on the market if they cannot remove the condition.

don't reject the offer outright.

Here's a couple links with info on FHA loans:
http://www.fha.com/default-overture.cfm

Here is a link that might be useful: FHA Loans

I have heard horror stories about the paperwork and inspections for FHA loans.

If you're worried about the inspection, you may want to get your own inspector in before hand to get an idea of what needs fixing, which will allow you time for repairs; unless of course their inspector has already been through.

In days of old FHA used to be a nightmare -- we bought our first two homes FHA ( in 1977 and 1980)-- easier to qualify, lower down payment. It took a lot longer, the appraisal process and inspection process were miserable. As a result we were always wary of selling FHA.

It's different now. My son and his fiancee just bought a foreclosure, and are financing it with an FHA loan. The inspection and appraisal process has been streamlined and is no different than a conventional loan now. The advantage to the buyer is that they can get a loan for as little as 3% down and the income requirements are looser because the loan is guaranteed by the government. They may need this if they're not making any money on their current home.

I'd work with them on the offer and not be afraid of the FHA financing. if you can negotiate an offer that you'd like to accept, don't sweat the FHA financing, it truly is different now.

Below is a link that has some of the seller's costs that come with an FHA. You might want to look this over too before countering. Some you still have to pay with a conventional mortgage, but I believe there are some extra costs with FHA

Here is a link that might be useful: FHA loan FAQ

Thanks for the advice. We decided that we would counter and not reject the offer. Now trying to come up with that magic number. Glad to see that FHA isn't as bad as it used to be. I understand its purpose and I'm glad it is out there for people to utilize.

I guess since they are going FHA, they probably can't remove the contingency. Two buyers are listed, both with different last names, but they both say "a married person". But the contingency for sale form only lists one of the buyers. I think we were told he is cosigning for her, but it is his house that has to sell. I am a little confused by that...but not sure it matters.

They checked the box that says seller to pay _____ points in excess of buyer's obligation....they put 0 points there. They also put the loan amount will be $185000....which is almost 90% of their offer. I have read that with FHA you can put down as little as 3%...but is there a limit as to how much you can put down?

Thanks for your help!

We decided that we would counter and not reject the offer

I am surprised that you would even consider rejecting and not countering. Their offer is not contingent upon finding a buyer for their house, but upon closing on it - a huge difference in this slow market. FHA loans can close just as smoothly as conventional loans and you shouldn't worry about a big difference in inspections. If you come to terms make sure that your agent stays in close contact with their agent to make sure that the sale of their house goes smoothly.

Two buyers are listed, both with different last names, but they both say "a married person". But the contingency for sale form only lists one of the buyers. I think we were told he is cosigning for her, but it is his house that has to sell. I am a little confused by that...but not sure it matters.

I don't share the same last name as my husband, there's a lot of women these days either keeping their maiden or using both. Could also be that they are planning a wedding and will be married before of soon after closing.

Our initial thought was that we didn't want to deal with whatever goes along with FHA...only because we didn't know anything about it. After a little research and reading on this site I realized it wasn't that big of a deal really.

I just thought it was weird that they included "a married person" after their names. Didn't think having different names was all that strange. When we bought the house nine years ago, we weren't married yet. But I don't think we put "a single person" after our name. Hmmm...I'll have to try to find our contract on the house from back then and see. I don't care if they are married, divorced or whatever...just as long as they show up to closing!!

Another reason they maybe using FHA is that those loans are often assumable. That hasn't mattered much in recent years with low rates, but imagine how attractive an assumable rate of 6.5% fixed might be to a potential buyer if rates went up to 9 or 10%.

The married person may have something to do with the deed. It could be that they are only getting the loan in one person's name because the other one hasn't worked long enough, has a lower credit score, or any number of reasons.

Our deed says something about husband and wife, I forget exactly what we do have different last names but it is the same for everyone

Since they are from out of state that may be how it is done there

In your case I would grab the offer