Source: TJ Jenkins from Home Team Lending in Greeley CO
Do you have questions about appraisals? Tonja Jenkins, from Home Team Lending in Greeley CO gets asked about appraisals quite often. So she decided to ask their in-house appraisal manager to answer the questions they hear the most. Here they are!
Q: Is there a big difference between Conventional appraisals and FHA appraisals?
A: They’re more similar than most people think. Some people have the false impression that using a Conventional appraisal is a way to skirt what they think are stricter FHA standards. As it turns out, Conventional appraisals are more similar to FHA standards in terms of safety, soundness, or structural integrity than most people think.
Q: Is it safe to assume that all conventional appraisals can be completed “as is”?
A: No. There are certain situations where homes with incomplete items and/or conditions that affect the safety, soundness and structural integrity of the property will be required to be repaired prior to closing.
Fannie Mae’s official statement is:
When there are incomplete items or conditions that do affect the safety, soundness, or structural integrity of the property, the property must be appraised subject to completion of the specific alterations or repairs. These items can include a partially completed addition or renovation, or physical deficiencies that could affect the safety, soundness, or structural integrity of the improvements, including but not limited to, cracks or settlement in the foundation, water seepage, active roof leaks, curled or cupped roof shingles, or inadequate electrical service or plumbing fixtures.
The appraisal report must identify and describe physical deficiencies that could affect a property’s safety, soundness, or structural integrity. If the appraiser has identified any of these deficiencies, the property must be appraised subject to completion of the specific repairs or alterations. In these instances, the property condition and quality ratings must reflect the condition and quality of the property based on the hypothetical condition that the repairs or alterations have been completed.
Q: Can homes with paint issues be appraised as is?
A: It depends – if the home has peeling and chipping paint, but the underlying surfaces are not exposed to the elements, repainting is not required. However, if any of the underlying surfaces are down to “bare wood”, these areas will need to be repainted. This constitutes a soundness and/or structural integrity issue as prolonged exposure to the elements could cause rotting to the structure.
Q: Does negative drainage around the foundation of a home require repair?
A: In most cases, yes. This would result in the possible water collection and seepage along the foundation walls which could result in settlement and/or cracking.