What lenders require before approving financing

Conventional mortgages rarely require pre-closing repairs unless an appraiser notes an obvious safety hazard. Government-backed mortgages (FHA, VA, and USDA) enforce strict Minimum Property Requirements (MPRs) that must be resolved prior to closing:

  • Peeling paint on older homes: For homes built before 1978, any peeling or chipping paint is treated as a lead paint hazard under HUD guidelines and must be scraped, primed, and repainted.
  • Roof life expectancy: The roof covering must have at least 2 to 3 years of remaining useful life. Active leaks, curled shingles, or heavy granular loss will halt underwriting.
  • Stairs and guardrails: Stairways with 4 or more risers require a continuous handrail. Open walking surfaces elevated more than 30 inches above grade require guardrails.
  • Crawlspace condition: Crawlspaces must be dry and accessible. Exposed earth must be covered with a continuous 6-mil black polyethylene vapor barrier.
  • Permanent heating system: The home must have an installed heating source capable of maintaining 68°F in all habitable rooms. Space heaters and non-conforming wood stoves do not qualify.

The 5 major defects that cause buyers to cancel contracts

Most sales survive minor electrical or cosmetic issues. In Thurston, Pierce, and Lewis County, sales collapse over five primary structural and mechanical findings:

1. Foundation settling and structural movement

Hairline shrinkage cracks are normal in aging concrete foundations. Stair-step cracks through mortar joints wider than 1/4 inch, horizontal cracks showing lateral inward deflection, or rotted rim joists in the crawlspace point to active structural movement. Foundation piering and structural stabilization typically cost between $5,000 and $25,000.

2. Obsolete electrical panels (Federal Pacific & Zinsco)

Federal Pacific Electric (FPE) Stab-Lok and Zinsco panels have documented breaker failure rates where breakers do not trip during electrical overloads. Most Washington insurance carriers refuse to write homeowner policies on homes with these panels. Replacing a main service panel with a modern 200-amp unit costs between $2,500 and $4,500.

3. Active roof failure and rotten decking

Western Washington's high annual rainfall accelerates moss degradation on shingles. When water penetrates shingles and rots the underlying plywood decking or rafters, replacement is mandatory. A full tear-off and roof replacement in Western Washington ranges from $9,000 to $22,000.

4. Collapsed or root-invaded sewer laterals

Standard home inspections end at the foundation wall. When a sewer scope video inspection reveals broken clay tile, crushed Orangeburg pipe, or heavy root intrusion, excavation is necessary. Sewer line repairs or trenchless pipe bursting cost between $4,000 and $15,000.

5. Standing crawlspace water and structural mold

Western Washington's high seasonal water table causes water to pool in unsealed crawlspaces during fall and winter. Chronic dampness leads to fungal wood rot in floor joists and indoor air quality concerns. Installing an interior French drain system, sump pump, and vapor barrier costs between $3,500 and $10,000.

Contract options for buyers under Washington NWMLS Form 35R

When an inspection report reveals significant defects, buyers have three clear options under standard Washington purchase agreements:

  1. Request seller repairs: The buyer specifies items the seller must have fixed by licensed and bonded contractors before closing, with receipts required.
  2. Request a closing credit or price reduction: The buyer negotiates a dollar credit toward closing costs or a lower purchase price to manage the repairs themselves after closing.
  3. Terminate the contract: The buyer walks away within their contingency window and recovers 100% of their earnest money deposit with no legal penalty.

Summary

Under Washington law (WAC 308-408C), home inspectors evaluate functional conditions and safety hazards without issuing a letter grade. The inspection report provides verified photographic facts about major systems so buyers and sellers can make realistic financial decisions before closing.