5 Things Agents MUST Do Before Every FHA Appraisal
Can you think of anything worse as an agent than for the appraiser to make a final inspection necessary for one of your FHA sales? Ok,
maybe there are some other scenarios that would be worse but let’s talk about the appraisal today.
An appraisal reinspection can potentially hold up a closing and cost the buyer more money but I’m going to give you some advice here to help avoid that and help your sale go smoother. Appraisers must verify the operation of specific items in the house and inspect certain areas and you can make sure this happens by preparing ahead of time so today I’m going to give you 5 things agents must do before every FHA appraisal.
Turn electricity and water on
The mechanical systems and utilities must be checked to make sure they are operational during the appraisal observation. This is so that the plumbing and heating and cooling system (HVAC) can be checked. If the house is occupied then this is not usually a problem but if it is vacant then you should make sure the utilities are turned on before the appraiser visits the property.
If they are not on then the appraiser must either make the appraisal subject to them being turned on, make the appraisal subject to a future inspection to determine if the systems are operating, or complete the appraisal with what’s called an extraordinary assumption that the utilities, mechanical systems, and plumbing systems work correctly.
Whenever the mechanical systems are on and operating the appraiser must verify the following:
Make sure HVAC sytem works correctly
When the electricity is turn on then the appraiser can verify if the HVAC system is operating correctly. The HVAC system must be turned on to determine if it operates correctly, and if it doesn’t then it must be fixed as a condition of the appraisal.
If the agent can make sure the system is operating correctly then this should be a non issue and will not hold up the closing due to a re-inspection requirement.
Clear crawl space of debris
The crawl space must be inspected and free of “trash, debris, and vermin” so that the appraiser can see all areas. The reason for the requirement to be free of debris is so the appraiser can determine if there is any dampness or ponding of water beneath the house. If there is then there must be a vapor barrier. The crawl space must have approximately 18 inches of clearance if system components are present.
Before the appraiser visits the property it would be a good idea to make sure nothing is stored beneath the house that would get in the way of the appraiser visually observing crawl space. Of course you want to make sure the crawl space access door is not locked. I’ve had to make a second trip to the home for something this simple and it could have been avoided if the access door had been unlocked before I got there.
Clear attic of debris
This requirement is similar to that for the crawl space because we must observe all areas of the attic. We are not required to move insulation, personal items, furniture, equipment, or debris ourselves so if any of this is present and it would hinder our viewing of the attic then we are required to contact the mortgagee and reschedule a time when a complete visual inspection of the attic is possible or make the appraisal subject to inspection by a qualified third-party.
During the inspection we must look for things such as signs of moisture (water stains), insufficient ventilation, or signs of mold. If you see anything like this during you or your clients inspection then it should either be fixed before the appraisal or expect that it will be a condition of the appraisal, meaning that it will have to be done before the closing. Of course the final decision will be made by the underwriter.
Make sure windows open
I was in a home this week for an FHA appraisal. It was built in the 1950’s and it had wooden windows. A couple of the windows would not open when I tested them so I had to make the appraisal subject to them being fixed so that they would open easily.
This type of thing usually occurs with older homes with wooden windows because over the years they have been painted shut. Since safety of the occupant is a big concern with FHA financing the windows must easily open and shut so that if it is necessary to exit the home due to a fire or other emergency it can be done.
Make sure appliances work
If the home has appliances they must operate. The appraiser must note which appliances are present and whether they are personal or real property. A slide in refrigerator would be considered personal property while a built-in sub-zero style unit would be real property.
The appraiser must operate all the appliances included in the sale and observe their operation. If the owner or seller is present at the time of the appraisal observation then it might not be a bad idea for them to save a load of dishes and do them when the appraiser is there so the operation of the dishwasher can be observed. If this is not possible then the appraiser will still need to verify how they work and the extent of what occurred.
What this means is that if they just turn on the dishwasher and go through the different cycles quickly then this must be disclosed. As I noted previously the water needs to be on in order to do this.
Conclusion
So that’s not too much to ask is it? It’s important for the agent to be aware of exactly what the appraiser must do for the appraisal and to prepare the house so they can perform their duties. This will insure that the appraisal can be performed without the need to call for a final inspection that will possibly prolong the loan process and cost the buyer more money.
Question
Are there any other parts of the FHA appraisal that you are curious about? I’d like to hear about your experience so let me know your thoughts by leaving a comment below. Thanks for reading.
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I was buying a house that I thought I never would find when it came to the appraisal Underwriters told me that I had to use the previous appraisal assigned to the house so I did 3 weeks later Underwriters told me that I couldn’t use the prior appraisal because my BK was not up until a month after the prior appraisal was done we’re talkin one year and 11 months prior to the 2-year BK anniversary so I pay for an appraisal appraisal came in low so the seller backed out of the deal is that legal for the underwriter Department to have me do one thing this mandatory then three weeks later tell me I had to do something else
Unfortunately, that is a bank-related issue that I am not sure about. You might be able to call your state banking commission and ask them.
Questioning whether this home can sell with an FHA loan? Owner bought with an FHA loan 18 months ago & no repairs were done. What are your thoughts?
*No dishwasher is the area where dishwasher should be (There was 1 when owner bought)?
*Electrical doesn’t work on one wall in eat in kitchen area?
*Laundry is located in closet outside off of patio. It has wires that are not in conduit?
*No light fixture in family room and bedroom. I know this can just be capped off with a plate so there are no exposed wires.
If the electrical does not work on one wall in the kitchen I doubt it would qualify for FHA financing as-is. After the problem was corrected it should be ok.
Is one scrawl space enough. Does it also need vents in house and how many. It is a fha loan.
There is no required number of vents for the crawlspace but it does have to be adequate to provide proper ventilation.
I need some advice, I had a fha appraisal done and the water was not on at the time, now the waters on and the original appraiser is on vacation for the next month…. Can someone else finish the report?
Sorry to hear about your problem Eric. I would ask the bank/mortgage company to get another appraiser to come out and verify the water is now on. I’m sure they would agree since it could hold up the loan of you had to wait for the original appraiser. Good luck!
Sounds like an easy list to me. Thank you Tom.
Thanks Gary.
I’m glad you are thorough, Tom. It’s easy for some to look at an FHA list and say, “C’mon, you are being way too strict about windows (or whatever)”, but the truth is you are simply doing exactly what you are supposed to be doing. Good for you.
Thanks Ryan. FHA does have more strict guidelines than conventional loans so that is something people may want to consider when pursuing that type of financing.
I’m supposed to close on my home on Friday (August 5th.), YIPPPEE! However, I’m just now finding out that the Owners have elected NOT to fix the Egress Burglar Bars, which was/is 1 of the determining factors in me buying this home! I had no Contingencies, & the Bars were not marked off on my Property Disclosure! So upon doing my Home Inspection in June, this is when I found out about the Bars needing to be done (as well as the Appraisal Report on July 26th.)! So they have elected to take the Bars completely off the house! I’m DEVASTATED to say the least! I’m afraid that if the Insurance finds out my Premium could go up, because I received the Security Discount! Now the value of my home will go down, & I’m a single Female that’ll be living alone! I WANT MY BARS BACK! Then to make matters worst, the Listing Agent called my Agent Saturday to say that they didn’t buy enough of the same Flooring to do the Kitchen & my Den, & what they bought has been discontinued!! WHATTT? So they asked if I wanted them to do the Kitchen or what? I said NOOO, because I want those Floors matching since it’s 1 Connecting & Flowing Room! I feel cheated at this point, because they Sellers knew about the Bars & Water Damaged Flooring way back when we did the Home Inspection 2mos. ago! Therefore, if they weren’t going to fix the Bars & Flooring, they should’ve told me/my Realtor, & I wouldn’t be hit with this 1wk. before Closing! I totally understand the Law & FHA Guidelines on the Bars, but I’m not happy that they let or used the time to tell us that they’re not going to fix these! I’m not upset as much about the Flooring, because I want(ed) to put my own spin on it anyways, Cool no problem! However my Bars, OH I have a BIG PROBLEM! Then I was supposed to Close on July 22nd., but they asked for an Extension, because they weren’t finished with all the other Repairs, & they still never told me/or my Realtor at that point about the Bars &/or Flooring-only told us last Wednesday no Bars, & Friday not enough/discontinued Flooring! So what if anything can I do? I asked my Realtor to see if they would Paint the Interior for me, so that I can feel or get some form of satisfaction at this point, but she ‘Balked’ at that, & wasn’t reassuring, nor helpful! I’m supposed to do my Final Walk-Through on Tomorrow or Tuesday, & I don’t know when or how the 2nd. Required (Requested) Appraisal will be done, because like I said Closing is this Friday! If I’m being Petty or unreasonable, then please tell me! I didn’t ask for help with Closing Costs, nor the Down Payment Assistance! It was just a Straight Shot Contract! I even offered less, & they Countered wanting the Full Asking Price, because the Sellers stated that they’d be doing ALL the Flooring, the Roof, & the other items requested! So everything was/has been good up until a week 2wks. ago! Please advise, & thank you for your time!
As far as these items are concerned, from an appraiser’s perspective, the bars must be removed or replaced with security bars with a quick release mechanism for safety reasons. Is it possible to find another acceptable flooring for you since they don’t have enough of the original flooring?