topic Re: What they are looking for in appraisal? in Mortgage Loans

What they are looking for in appraisal?

chan85 — Tue, 03 Jul 2012 16:46:16 GMT

I am currently pending an appraisal for the house I put an offer in on. We had the inspection done about 2 days after the initial offer, and we are now a little over 30 days since then because it was a short sale and Chase just approved my offer it last week.

The inspection mentioned a few items- PVC piping potentially needs to be replaced and securing the deck- which I have no problem doing in the next few months after I move in. The home is sold "as is", which I was comfortable with after the inspection.

But in reading other people's experiences, I am concerned now we will be delayed in closing after the appriaisal. Will the appraiser be checking many of the same things and demanding they be fixed before closing? Or are they just there to determine the appropriate price on the home in comparision to the neighborhood and what my offer was? I have literally NO additional time for closing since I have to be out of my current home on the 31st....and now I am worried there will be a delay due to something in the appriaisal report.....

Re: What they are looking for in appraisal?

jules0580 — Tue, 03 Jul 2012 17:53:38 GMT

the appraisal will give a value of the current home in its current condition, so it will reduce the value if there are alot of repairs needed etc. But not the same as an inspection. However FHA and VA appraisals will require some things be repaired before closing such as paint chipping etc.

Re: What they are looking for in appraisal?

chan85 — Tue, 03 Jul 2012 18:00:56 GMT

hmm paint chipping? i'm going to have to look and see what things they look for a little harder.... there is not paint chipping, but they have some kind of like cement siding around the basement that is flaking off, hope that doesn't cause a problem.....

Re: What they are looking for in appraisal?

chan85 — Tue, 03 Jul 2012 23:49:17 GMT

seems i answered my own question with a quick google search....only thing i think i am concerned with is wiring, think there was some shady wires in the basement that need to be capped properly....

Source: http://homebuying.about.com/od/financingadvice/qt/FHA-Repairs-to-get-an-fha-loan.htm

Types of FHA Repairs That Must be Completed Prior to Closing an FHA Loan

Peeling paint in homes built before 1978.
Unpainted downspouts and broken rain gutters.
Rotting out-building in need of demolition.
Exterior doors that do not properly close and open.
Exposed wiring and uncovered junction boxes.
Major plumbing issues and leaks.
Inoperable HVAC systems.
Leaky or defective roofs, roofs with a life expectancy of less than 3 years, composition over shake.
Active and visible pest infestation.
Rotting window sills, eaves, and support columns on a porch.
Missing appliances that usually are sold with a home such as a stove.
Bedrooms without minimize-sized windows or bedroom windows with bars that do not release.
Foundation or structural defects.
Wet basements.
Evidence of standing water in the crawl space.
Inoperable kitchen appliances.
Empty swimming pools, pools without a working pump and pools with mosquito fish.
Ripped screens.
No pressure relief valve on water heater.
Leaning / broken fence.

Types of FHA Repairs That are Not Necessary to Fix Before Closing

Peeling paint in homes built after 1978.
Cracked glass in windows.
Minor plumbing defects such as a dripping faucet.
Missing handrails.
Damaged wall coverings in homes built after 1978.
Worn out carpeting or defective floor finishes.
Beat-up or damaged exterior doors that still open and close.
Trip hazards such as heaving sidewalks.
Removal of debris under the house.
Lousy workmanship.
Evidence of previous or inactive pest infestation.
Replacement of flat roofs.
Testing of wells, unless required by local jurisdictions or water is suspected of contamination.

[Edited to add the link to source. Material subject to copyright protection must be properly attributed.]

Re: What they are looking for in appraisal?

JusdoNit — Tue, 03 Jul 2012 23:39:36 GMT

OP thanks for the list

Re: What they are looking for in appraisal?

Anonymous — Wed, 04 Jul 2012 02:31:18 GMT

My appraiser had a list of repairs that would need to be completed in order for the home to truly appraise at the value he stated. "Subject to repairs, the home is valued at ______" basically. Mine were "remove/replace damaged screen on back porch, repair cooktop and oven, scrape paint off front porch conrete, fix windowsill and match the paint, fix attic latter, remove/replace front porch railings." Thought I'd add mine in there since these aren't listed in the appraisal list but adds monetary value to the appraisal price. We did have to have these repaired per our lenders request to reflect the full appraisal value.

Re: What they are looking for in appraisal?

Jazzzy — Wed, 04 Jul 2012 20:12:51 GMT

Other examples of what can be called are health and safety hazards, such as carpets that have been soaked with pet urine. In that case, for example, they can require that all carpeting be removed and the underlayment be replaced or sealed.

It is the appraiser's duty to call such items.

Re: What they are looking for in appraisal?

chan85 — Wed, 04 Jul 2012 20:31:51 GMT

Sorry about the missing link! Well, I can only hope the appraiser doesn't find too much that needs to be fixed since its sold as is, I know the seller isn't willing to fix anything and I don't wnt to spend a bunch of money when it's not officially MINE yet..... After appraisals and such, can you go bck and renegotiate price if needed- say if repairs are several thousands of dollars?

Re: What they are looking for in appraisal?

jules0580 — Thu, 05 Jul 2012 12:46:18 GMT

Yes if the house appraises for what you are paying based on things being fixed then you can say well without these being fixed the house is worth less, and you wont be able to get a loan for the full amount if its worth less so they would have to negotiate that with you.

Re: What they are looking for in appraisal?

chan85 — Thu, 05 Jul 2012 12:55:27 GMT

So for example, what if they say the house is worth $100k with repairs, but $97k without, however my loan is only for $95k, will they still require repairs??

Re: What they are looking for in appraisal?

jules0580 — Thu, 05 Jul 2012 18:47:11 GMT

FHA will require certain repairs yes, just because they wont allow certain safety issues, such as chipping paint in older houses, mold issues, wet basements etc. But other repairs no they will not require if you are borrowing less then the house is worth without the repairs.

Re: What they are looking for in appraisal?

chan85 — Thu, 05 Jul 2012 20:30:20 GMT

@jules0580 wrote:
FHA will require certain repairs yes, just because they wont allow certain safety issues, such as chipping paint in older houses, mold issues, wet basements etc. But other repairs no they will not require if you are borrowing less then the house is worth without the repairs.

Ok, that makes me feel better. The house is pretty much up to code, it has tenants in it so nothing major ir wrong with it besides the wiring and deck. I think I have eased my fears somewhat!

Re: What they are looking for in appraisal?

Booner72 — Fri, 06 Jul 2012 22:03:35 GMT

I believe repairs must be done by a certified person, but I have heard of buyers "breaking into" the property in the middle of the night to repair stuff before the appraiser comes for obvious issues that will need repaired.

What is the correct answer on who can do repairs?

And remember, if repairs Are needed, the appraiser has to come back out and check - this kinda thing can definitely delay the closing. Some of it is just pure silliness, but the safety stuff makes sense.

Also - when buying a house as is from a bank, do you think they really would consider lowering the price for appraisal repairs?

Re: What they are looking for in appraisal?

chan85 — Sat, 07 Jul 2012 14:38:06 GMT

@Booner72 wrote:
I believe repairs must be done by a certified person, but I have heard of buyers "breaking into" the property in the middle of the night to repair stuff before the appraiser comes for obvious issues that will need repaired.

What is the correct answer on who can do repairs?

And remember, if repairs Are needed, the appraiser has to come back out and check - this kinda thing can definitely delay the closing. Some of it is just pure silliness, but the safety stuff makes sense.

Also - when buying a house as is from a bank, do you think they really would consider lowering the price for appraisal repairs?

That's a good question! Anyone have any answers??

Re: What they are looking for in appraisal?

Jazzzy — Sat, 07 Jul 2012 16:33:03 GMT

Per my real estate appraiser husband....

Potential buyers and home sellers often perform the required repairs. In many cases, one side will buy the materials and the other will perform the labor, helping to share the burden and cost.

That said, items such as a roofing inspection must be done by a qualified inspector. Also, in many states there are statutes as to who can perform plumbing or electrical repairs. Painting and cosmetic repairs can be done by anyone.

(Hint: Don't just paint over flaking paint. Many appraisers will require that you start over and do it again...causing the expense to both buyer and appraiser of another trip to the property for a 2nd final inspection.)

Re: What they are looking for in appraisal?

chan85 — Sat, 07 Jul 2012 19:35:14 GMT

@Jazzzy wrote:
Per my real estate appraiser husband....

Potential buyers and home sellers often perform the required repairs. In many cases, one side will buy the materials and the other will perform the labor, helping to share the burden and cost.

That said, items such as a roofing inspection must be done by a qualified inspector. Also, in many states there are statutes as to who can perform plumbing or electrical repairs. Painting and cosmetic repairs can be done by anyone.

(Hint: Don't just paint over flaking paint. Many appraisers will require that you start over and do it again...causing the expense to both buyer and appraiser of another trip to the property for a 2nd final inspection.)

You guys ar such a wealth of information! That's great information! I'm feeling better and better about this appraisal coming back and me being able to handle it, just hope they get the price right!

Re: What they are looking for in appraisal?

Anonymous — Tue, 07 Aug 2012 03:58:07 GMT

I know this post is about a month old, but I wanted to add what happened when we needed our repairs. The sellers would not pay the repairs, so we added the total price to our loan. We had to use a Fannie Mae approved inspector (per USDA requirements) and they did the work up front. Speaking of - we actually had chipping paint issues too. This, however, was on the front porch where someone had painted the concrete. It was painted over and we were fine. Probably because the paint was so old that you couldn't tell there was paint on it to begin with. Lol. Hopefully you have your appraisal worked out by now. If not, best of luck!