Help with Conditions of Appraisal

[Anonymous]

My 2nd appraisal was turned into the bank on Friday.  LO sent it over to me and the realtors and put in this clause from the appraisal:

Conditions of Appraisal

Utilities were on and appeared to be functioning properly at the time of the inspection.

Head and shoulder inspection completed for the attic and crawlspace.

No public water and no public sewer available at this time.

Repair broken windows on barn or board over. CTC $500

Repair failing siding on Barn. CTC $500

A domestic well must be a minimum of 50 feet from a septic tank, 100 feet from the septic tank's drainfield and a minimum of

10 feet from any property line. Inspection required to determine isolation distances. CTC unknown

Intensive Agricultural noted within 1/4 mile, well and septic test required by FHA. CTC Unable to determine pending results.

What does this all mean?  Do the things in red HAVE to be fixed and checked prior to closing or do the Underwriter make that determination?  Our seller lives about 6 hours away and won't be back until the middle of January.  We have said we will make the repairs so we dont have to wait for him.  I am just wondering if this will have to be done before we can close?  We only live 1.8 miles from the house so we can have the repairs done in about an hour.  I am hoping we can do the repairs today, either take a picture and send to UW or have the appraiser come back out quickly to check on it so we can still close this week.  Drives me batty being at the mercy of other people and their schedules, the apprasier took almost a week just to get to the home! If I have to wait a week to have him recheck this repairs I might go crazy!!!!

Well and septic inspection were ordered yesterday, hoping it is done either today or tomorrow. 

[StartingOver10]

CTC means Condition to Close.

This means the item marked CTC must be cleared before you can close. So, not only does the item need to be fixed, it needs to be reinspected by the FHA appraiser that placed the original condition and submitted to the bank so they can see it has been corrected. Then your file will move to the closing dept so you can close.

The other two conditions that you didn't highlight are generally cleared with a survey showing the actual locations of the well and septic drainfield and a well and septic inspection. The survey has to show the exact locations and the distances right on the survey. The title co/closing attorney should have ordered it already but they have to specify in the order with the surveyor that those distances have to be marked and the locations shown or the survey won't show it.

The well and septic inspection should have been done with your regular inspections. Those are separate inspections. The water has to be tested too. It is an FHA requirement and is usually always required as a condition to close. You definately want to do this...even if it wasn't required. Do this sooner rather than later so that you can clear any issues if they pop up.  OOPS! I see you already ordered them. That's a good thing

BTW, the appraiser that put the condition in the appraisal is the only one that can clear it and submit back to the bank for the underwriter to clear.

Some FHA appraisers are better about going out to reinspect than others. They charge $$ for the reinspection. Make sure each and every item that needs to be reinspected is completed before ordering the reinspection or you are just throwing away $$. The underwriter will not accept a photo from you, the buyer, showing the work was done: only the appraiser.

Congratulations, you are almost there!

[Anonymous]

Many thanks StartingOver!  That information was greatly helpful!!! 

LO said today if we do the repairs we have to show we have the resources to do the repairs????.  All it is going to take is a piece of plywood, and we already have that.  How do we show proof we have the resources?  A bank statement?

[Jazzzy]

CTC is also known as "cost to cure" and is an estimate of the costs involved. You need to show that you have the resources to do that, and you will have to ask your loan officer what he/she requires for proof of resources.

As said above, make sure all repairs are made before you have the appriaser come back out. If not, you'll get to pay for another visit. Photographs won't cut it. You WILL have to wait until the appraiser can work you back into his/her schedule, but these final visits don't take long and can usually be worked in pretty quickly.

[StartingOver10]

Ok, looks like the appraiser estimated $500 for each repair. This is called the "repair cost". The actual repair cost is not material to the bank, oddly enough, only the amount the appraiser estimated for repairs

So you would need to show an additional $1000 in your accounts over the amount required to close. They want to make sure you have the funds to repair if you are doing the repair without impacting on your ability to close.

If you are doing the repair, then make sure that you know exactly what the appraiser is looking for. Failing siding is pretty general. Of course, you would have a better idea because you have seen the house...lol.  You want to make sure the item you repair meets the appraisers standards, or he won't pass it when he reinspects. It would help if you could get a copy of the condition repair section of the appraisal, an actual copy, not an email summary. It could make the difference between correcting it the first time the way the appraiser wants it or not. I had a deal where the loan officer manager didn't know the difference between a facia board and a soffett and it caused a huge delay. So if you see the actual section of the report you can repair what he is actually looking to have repaired. Also he/she has photos to show their concerns.

[Anonymous]

Ok.  This is great stuff.  I love all this help. 

I do have the complete appraisal and there is a picture of what needed to be repaired in the barn.  We have been trying to call the appraiser to see how exactly he would like it fixed so we do it right.  Someone told me that we could do the repair but said the seller did it so we don't have to show the resources available. 

Still waiting on the UW to clear the appraisal.  Hoping for an answer today.

[IOBA]

Suggestion - do NOT tell the powers to be (appraiser, lender, etc) that you did the repairs or that you paid for them.   It sounds like something has already been said...just dont' say anything more.  

A family member decided to do the "darn repairs" so that they could close.   It turned into a BIG mess becuase they were "trepassing" and "willful destruction" of personal property and "ID theft"...and -- I know -- the exception to the way the world works.   The owners got the repairs and didn't have to pay a cent.   

So the less said, the better.   And if the owners are ok with you doing the repairs, go for it.   

[Anonymous]

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@IOBA wrote:

Suggestion - do NOT tell the powers to be (appraiser, lender, etc) that you did the repairs or that you paid for them.   It sounds like something has already been said...just dont' say anything more.  

A family member decided to do the "darn repairs" so that they could close.   It turned into a BIG mess becuase they were "trepassing" and "willful destruction" of personal property and "ID theft"...and -- I know -- the exception to the way the world works.   The owners got the repairs and didn't have to pay a cent.   

So the less said, the better.   And if the owners are ok with you doing the repairs, go for it.   

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You are right, I already opened my big mouth and told the LO we would be willing to make the repairs, which is where the whole gotta show the resoures to do them now thing cam up.

We are going to do an addendum that says the seller is making the repairs, but we are going to do it.  He has extra steel in the barn that is going to be used, so it is actually his money, my hubby will just do the work. 

[IOBA]

Sounds like a good plan.    Now keep mum about WHEN the repairs are going to be done.   Get DH out there asap to get them done.    Then AFTER they are done, call the necessary power people to let them know.   Make sure the addendum is already signed by both parties and on file.

Good luck!