FSBO with Flooding issues

[Jared Cox]

We found a FSBO house that we drove by today. The current renters were moving out and we asked them some details on the property. Apparently the backyard slops down and with any rain there is flooding into the house. They owner has installed some new drains but it has not rained since then to test them out.

I called the owner and asked why she was selling she said that it was because she was "simplifying" and conveniently did not mention the flooding.

I have a few questions on this 1) will the seller have to disclose the flooding issue 2) would FHA approve of a loan on this house since it has not been proven the flooding is under control.

She is wanting the higher end compared to comps in the area (again with the out standing flooding issue) but has come down a little bit in the last month.

Another wrinkle we have some friends that are looking for a home they cannot obtain a loan right now due to some credit issues they are fixing. I was thinking of approaching the seller to see if she would be interested in a lease to own option contingent on the flooding being fixed. This couple will have to use a FHA loan, would this create any issues?