Appraisal ChecklistDon’t let appraisal repair conditions ruin your transaction

It’s imperative that you protect yourself by insuring the property you’re purchasing or selling is ready to be inspected by an appraiser.  Allowing an appraiser to inspect a property with health and safety issues can easily derail a transaction and inflate the costs of repairs due to inaction.

“Per FHA Single Family Housing Policy Handbook, “HUD requires every property to be safe, sound, and secure to be eligible for FHA insurance”. The property must also comply with HUD’s Minimum Property Requirements (MPR) and Minimum Property Standards (MPS). FHA appraisers must report all readily observable property deficiencies, as well as any adverse conditions discovered performing the research involved in completion of the appraisal. In addition to identifying and disclosing these items, appraisers must provide photographic documentation of them in the appraisal report. “ -AAA Appraisal Management Company

A homes deficiencies and adverse conditions can lead an appraiser to request additional inspections that buyers and sellers don’t require.  Knowing common FHA repair conditions can help avoid the need for additional repairs and re-inspections.

The following repairs are suggested prior to scheduling an FHA appraisal inspection:

  • Repair (i.e. scrape, sand, fill, prime, paint) all defective paint surfaces.
  • Repair all leaks (i.e. plumbing, HVAC, roof, foundation, etc.).
  • Repair all foundation/structural settlement.
  • Repair/replace defective roofing.
  • Repair/replace all loose/missing handrails.
  • Repair/replace defective and exposed electrical wiring.
  • Properly install required safety items such as GFCI outlets, smoke detectors, carbon monoxide detectors, water heater pressure relief valves/extension pipe/straps, etc.
  • Repair/replace broken inoperable windows/doors and their locks.
  • Repair/replace broken/inoperable overhead garage door openers.
  • Repair/replace broken/uneven/loose stairs, walks, driveways, flooring, etc. (Trip hazards)

Why do I care if an Appraiser requires repairs or other inspections? Isn’t that a good thing?

By the time you have an appraisal done, you should already know the issues a home has and hopefully negotiated with the seller to repair items that will impact the financing of the home.  If an appraiser requires a repair they will charge for an additional inspection to ensure that said repair was completed.  Avoiding charges and issues should be your focus.

Why is chipping and peeling paint a big issue?

Homes built prior to 1978 with chipping and peeling paint shouldn’t be inspected until the paint is repaired. If the home was built prior to 1978 FHA requires and EPA certified painter to repair even the smallest repairs and that can cost nearly double the normal rate depending on the painter.  The seller can easily fix these things before the appraiser visits the property and avoid a potential nightmare.

Does an Appraiser really need to come out to the home to confirm a smoke alarm was installed?

YES! Make sure there are smoke alarms in all bedrooms and a Co2 detector installed on each floor. Otherwise this will incur a re-inspection fee ($50-$150)

 

Jeff Womack

Jeff Womack

Sr Loan Officer and Mortgage Blogger at The Mortgage House Inc.
HARP, FHA, VA, Conventional, USDA, down payment assistance. Blogger and mortgage expert helping potential home buyers finance homes . Serving Stockton, Lodi, Elk Grove, Sacramento (NMLS #262055)
Jeff Womack

@jwmortgagehouse

Mortgage & real estate information with your home loan expert in the Stockton and Sacramento area.
Jeff Womack