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Selling a property with a well

Geo-TH,In

Geo-TH,In

Well-known Member
I'm going to sell a rental house. Realtor said selling a house with a well when you have city water in the street will disqualify people applying for FHA loans. April 28, 2017 - When the FHA and HUD published new single family home loan rules in HUD 4000.1

?The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department.?

It would cost me about $1500 to $2000 to connect to the city water. Plus a $500 tap on fee.

Realtor also asked if there is a farmer's field within a 1/4 of a mile.

I've never sold a property, to all this is a learning experience.
full article mentioned above
 
You could offer the property as is for one price and another price to have the water put in. There are people out there paying cash for property.
 
If the property is adjacent to a field that is farmed, and you want people to be able to apply for HUD or FHA loans it will be necessary to do the deed (so to speak). If you use the Terre might (just kidding) to trench the line, and dig the supply for the lines, and lay the copper (or ?) with a permit, it will cost less. Jim
 
Good question George and it will be interesting to find out what some have to say and what you end up doing. Of course, the YT crowd pretty much live everywhere but where you're located. And nobody has to tell you to seek local advice as to what might be the best way to go about it, you're aware of that already. Good luck and hope you can do it as inexpensively as possible.
 
We have sold 2 houses with wells, but there was no city water available, but on the last one the sewer had to pass an inspection, and it did, what a relief! Our Son sold a house contract for deed this spring with a hand dug well 25 feet deep, and now they pumped it dry. they knew this beforehand, and he discounted the price by $10,000 for a drilled well, so it's their problem. This was near Duluth MN. He did get a bank loan on the place 15 years ago with that well known, he got by OK because he's single and didn't need a lot of water. Pretty dry in N MN this summer.
 
Realtor says that about 40% of their sales are FHA people.

I have another property that I spend about $3500 for a well. I'm regretting not connecting to city water.
 
Sister had a cash offer on her house. Only problem, buyer couldn't prove where he got the cash from. Her house sold for $350,000 to a different person.
 
Here it costs about $12,000 to connect to city water. I am on a well and the sprinklers run a lot. But now days you have to jump through a lot of hoops to get a permit to drill a well.
 
OH yes, the gubermint has to have all kinds of strings attached to their money guarantees. Sell it as is where is, if the people want to go FHA or VA then they will make the needed improvement. There will be other issues, the roof, the basement(radon), siding windows electrical service. Its for sale at this price, your loan is between you and the lender and the government. Let the buyer decide financing. Now if you NEED to sell, well that changes all the above, just my uneducated opinion. gobble
 
Two grand to hook up to city water is CHEAP! If you've had city water available for some time, I'm surprised it isn't a lot higher; water departments often penalize homeowners who procrastinate with their hookups.

The city will probably want your well completely disconnected from the house to eliminate the possibility of backflow from your well to the municipal water. I suggest installing a yard hydrant on the well so it can still be used for the lawn and garden.
 
Not selling to an FHA buyer would be the best bet. Been there, done that, FHA loans make selling a pain in the arse for the seller. Is there anything in the house grandfathered, as in met code when installed, but is no longer code? If so, it has to be brought up to modern codes. Railings, step heights and angle, lead paint, the list is endless.
 
Thats highway robbery, I live out in the country in Alabama and use a deep well, I also have a water meter with the County Water Authority, I ran a 1? line from the meter and tied in at my well (it?s valved off where I can use either at anytime) .I did this for a backup water supply in case my pressure switch or capacitor was to fail during the night or a weekend so that I?d still have a water source at all times, our water taps here only costs $200.
 
Why is that? About the last thing I'd want is nasty tasting and smelling public water.
Click to expand...

Isn't that the truth!!!!

When the wife was recently in the hospital, I was bringing in our well water so she would have something to drink that did not remind her of a swimming pool.
 
I?m going to agree with you TF, completely.

Here well water is easy and plentiful to hit, a good well sure beats the city crap from the rivers. Who wants to drink that, yuk.

Paul
 
(quoted from post at 16:31:56 07/29/19) Two grand to hook up to city water is CHEAP! If you've had city water available for some time, I'm surprised it isn't a lot higher; water departments often penalize homeowners who procrastinate with their hookups.

The city will probably want your well completely disconnected from the house to eliminate the possibility of backflow from your well to the municipal water. I suggest installing a yard hydrant on the well so it can still be used for the lawn and garden.
Click to expand...

Cost of permits in Howell township is about 9k for water, and almost 5 k for sewer. Notice that does not get you one inch of pipe, that s on you. I ve heard about 25k all in. And you also get one of the highest water rates in the state, about $19 per 1000 gallons.
 
The way houses are selling in the southern part of the state I would refuse to sell thru HUD. Alot of houses around here sell in one day for asking price. As for hooking to county water I think its $500 for meter to be set. On a side note REMC ran fiber optic internet to my house free!
 
I would agree with rusty. tap water is treated so its safer for human consumption. for you people who don't agree then tell me how many times have you had your water tested. I grew up with well water back in the 50s. not the same now.
 
Why do they charge $500 tap on fee. Like a dog licking, because they can.

Our city water in the county is not owned by the city, it American water, private company.

Lesson learned, I'll never put in another well.

After I sell this house, pole barn time so I can move my things out of building on other rental properties, install city water in them and put them up for sale.

Decided what I don't want to do anymore, be a landlord. 50 years is enough.

I think I'll be doing my kids a huge favor by selling out.
 
I find it humorous that folks think you should just not sell to a buyer financing through VA/FHA. Just eliminate half the potential buyers! And of those who are left, half of them will want to do a land contract because their credit is trashed; that's great fun!
 
> About the last thing I'd want is nasty tasting and smelling public water.

I'll take that over arsenic, iron and e. coli. Which is what you get with well water.
 
In our area when the little towns get annexed into the larger ones it is mandatory to switch over. So yours is still voluntary ? Can't they try selling it like it is and if it becomes a deal breaker can't they put it in the contract that it will be switched over in so many days ?
Some may like the idea of no having a water bill.
Is the sewer hooked to the city or is it a septic system ?
 
American does the water in the city but in the county its more like a coop . the 500 is for the meter I believe, if your already a member they don't charge you any other fees, when I bought my first house they waved the fees because my parents were members. I have one rental, its at he end of my farm. I bought the farm when I got out of collage and fixed up the house. Sold the house a few years later when I built my new one and had enough left over to pay off the farm, bought it back 10 years later for a 1/3 of what I sold it for.
 
Cat guy ..... I've never tried drinking recycled sewer water but I'll take your word for it that it's not pleasant. You're a braver man than I am. Have you ever considered getting some of that city water tested at a government lab? I'm sure they'd be able to deal with it quickly if it's as you describe.
 
George .... yes you are correct, your kids will be more than happy when they plant you, not because you're gone (hopefully) but because of your decision to pass along hard, cold, cash. Meanwhile, it reminds me of the old joke .... if a guy wants to make sure that his kids are sad at his funeral, spend all of your money before you die. All this talk of dying is uncomfortable .... ha!
 

List the property with a well and public water available, if someone wants to use FHA you can negotiate the price of the connection.
Where I like a well increases the value of the property, we don't have little 20-30 ft sand wells, we go deep into the limestone aquifer.
Well for my house is 400 ft, the one for the poultry barns is 525 ft, yes they cost a lot of money, $10K for the house well in 98, $16K for the poultry barn well in 06.
Closest public water to me is 5 1/2 miles, no projection to run public water thru this area for another 5-10 years.
If you don't have a good spring or a well your paying $60 for a 2000 gallon load hauled in to your reservoir.
 
Some of the folks in the development that abuts my property have asked how I can afford to water so much. They have ~7500 square foot lots and to keep the yard up, some are spending up to $300/month in the summer for water.

Since public water is in the road in front of the house now I could never get a permit to drill another well. Not enough acres to qualify for AG reasons. Also sewer is there so if my septic tank or drainfield ever go bad I will not be able to get a permit to replace those and be forced to hook up to sewer.

At the end of it all it is just local government's way of trying to get more houses in the area. They would much prefer that I sell out and some developer put 20 houses on the place. Much better property tax revenue for the county that way.
 
(quoted from post at 18:59:29 07/29/19) Sister had a cash offer on her house. Only problem, buyer couldn't prove where he got the cash from. Her house sold for $350,000 to a different person.
Click to expand...

If paying cash, the only people wanting to know where the cash came from would be the feds.
So if they could not come up with an acceptable answer, your sister is lucky to have not sold to a shady character.
 
(quoted from post at 18:06:01 07/29/19) I'm going to sell a rental house. Realtor said selling a house with a well when you have city water in the street will disqualify people applying for FHA loans. April 28, 2017 - When the FHA and HUD published new single family home loan rules in HUD 4000.1
Click to expand...

Forget the HUD rule.
Have you looked into the local rules of a property such as yours changing hands?
The local gov. might have a lean on your deed that will force/trigger the seller or buyer to immediately hook up to the water line.

No matter if public or private water company as it was likely public at one time and sold off.

There can be some crazy rules of existing and used to force connection to the system.
 
OK, I read the relevant statement in 4000.1 HUD rules, here it is:

"The Mortgagee must confirm that a connection is made to a public or Community Water System [b:0b9eec3522]whenever feasible and available at a reasonable cost[/b:0b9eec3522]. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department."

Who makes the determination of avail at a reasonable cost? If I were applying for an FHA loan, and I wanted a house, and that house had a well, and that property MAY be connected to a public system, it would be very easy for me to put a statement into the escrow that 'I have checked, and determined that the connection to the public water source is unreasonable, and that the water provided by the private well on the subject property produce sufficient, and clean clear water for human consumption'. If the FHA balks, then they have to show that connection to the public system will be 'reasonable'. What's reasonable mean to me? To them?

If the FHA rejected the load for that, I'd get a lawyer, and tell them to sort it out. Of course, the FHA has unlimited budget, so it's a fight one can never win, but maybe they'll back off. Who knows?
 
Our county is just the opposite they do everything they can to keep landowners from breaking up their property into lots for houses because providing schools for children from the
new houses costs more than the extra tax money they get from them.Plus more services like fire and rescue.
 
[b:654c4848f0](quoted from post at 09:55:36 07/30/19) City water = recycled sewer water. Tastes like it too. Well water for me.

That would be a federal offense under the rules for public water systems.[/b:654c4848f0]


You care to explain how that is against federal law???

Many cities get their water out of a river that flows past the town.
Unless you live at the head water source you have someone north of you dumping sewerage water into that river.
 
> Not in my area the well and spring water is fine to drink.Of course there aren't a lot of operations around that pollute.

Really? Nobody has septic fields? When was the last time you actually had your water tested for e. coli?

As for arsenic and iron, they are naturally occurring; you don't need any nearby industrial activities to have them in your water.
 
> Who makes the determination of avail at a reasonable cost?

Well, it says the [b:654c4848f0]mortgagee[/b:654c4848f0] must make that determination. Which is to say the lender, or more likely its underwriter. Which leaves a lot of discretion on the part of the lender, so maybe one mortgage company would say the cost is reasonable and another would not. But the first hurdle in George's case is that city water is available, and there's no way he can argue that the $500 hookup fee is unreasonable. Now if he had to pay for a mile of new water main, that would be another thing.
 
> Just because you live in some slum hole with lots of pollution doesn't mean everyone does.

It's obvious you have no idea where I live. And it's equally obvious you have no idea what's in your water because you've never had it tested.
 
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