If you’ve been around real estate for even a short time, you likely know a thing or two about FHA loans and some of what appraisers look for during FHA appraisal inspections. Well, here are 10 things you might not know about FHA appraisal requirements:
- Open up that Attic: If there is an attic, the appraiser is required to do a “head and shoulders” inspection of the attic – even if the attic access has been sealed off by the home owner. When that happens, the attic will have to be opened up again for the appraiser to safely be able to inspect the attic.
- Zero Value: There is no such thing in the FHA world for a certain feature or structure on a property to be given “zero value”. For example, despite a buyer, seller and agents agreeing that the run-down garage is not included in the sale, that’s not the way the appraiser will look at it.
- Hoarder Inspection: If the appraiser cannot see the floor or walls due to debris, the owner will have to clean things up so the appraiser can do a proper visual inspection of the property.
- Drive-by Inspections: FHA requires full interior/exterior inspections. Exterior-only or “drive-by” appraisals are not allowed.
- The Whole Enchilada: Every structure within the parcel lines has to meet FHA minimum property standards. This means if there is a barn with a defective paint surface or any other FHA issue readily observed, it’ll need to be addressed. FHA standards don’t just apply to the main house.
- Graffiti Removal: FHA states graffiti on the house must be removed because it is a safety issue.
- Old Comps: Appraisers cannot use comparable sales (“comps”) older than 12 months prior to the date of value. So if you share “comps” with an appraiser, they should be recent sales.
- Pool Safety: Each county or city has specific requirements for pool safety, so FHA will bow to local authority on their standards for pool safety. There is no one universal standard for all states, so it’s all about local standards.
- Direct Ordering: The lender can actually order FHA appraisals directly from the appraiser. FHA does not require the use of an AMC or third-party ordering system (made popular through HVCC). Keep in mind “lender” does not mean broker or loan officer, and most lenders opt to use a third-party system anyway.
- Calling FHA: If you are in real estate, keep 800-CALL-FHA handy for any questions you have on FHA standards – especially as it pertains to a particular property you are dealing with. In my experience HUD has been extremely helpful and polite during countless conversations I’ve had with them.
Here’s a quick video I did on the most common FHA repairs:
I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written, and definitely comment below if you’d like. Email or call with any questions.
Does anything above surprise you?