Over the past several years I’ve had some very good questions that have been asked on various topics regarding appraisals for FHA financing. So I’ve decided to recap some of those questions in blog posts. My guess is that if one or two people have had a particular question regarding a certain issue, then most likely there are several others wondering the same thing.
Some real estate agents question whether appraisers are becoming home inspectors (probably more like acting like home inspectors). I’m guessing that some agents feel that FHA appraisers have found several things wrong with a house that didn’t have anything to do with the appraisal of the home.
The best advice I can give when a real estate agent runs into a situation where they feel that an appraiser is nitpicking a home (pretending to be a home inspector), is to become very familiar with HUD’s Mortgagee Letter 2005-48. By understanding what HUD (FHA) no longer requires to be repaired, you’ll be able to better instruct (kindly) both the appraiser and underwriter what’s considered to be “normal wear and tear.” The list below is directly from HUD.
Examples of minor property conditions that no longer require automatic repair for existing properties include, but are not limited to:
- Missing handrails
- Cracked or damaged exit doors that are otherwise operable
- Cracked window glass
- Defective paint surfaces in homes constructed post 1978
- Minor plumbing leaks (such as leaky faucets)
- Defective floor finish or covering (worn through the finish, badly soiled carpeting)
- Evidence of previous (non-active) Wood Destroying Insect/Organism damage where there is no evidence of unrepaired structural damage
- Rotten or worn out counter tops
- Damaged plaster, sheetrock or other wall and ceiling materials in homes constructed post- 1978
- Poor workmanship
- Trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting)
- Crawl space with debris and trash
- Lack of an all weather driveway surface
If you have a property that you feel is going to have some issues, then I would definitely meet the appraiser to discuss any potential problems. Always bear in mind that the underwriter has the final say, so if there is something on the appraisal that you feel is clearly a normal wear and tear item, then send them a copy of HUD’s letter along with an explanation of why you feel this shouldn’t be a work order, even sending a picture would be a good idea.
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