Category — FHA Appraisal Articles

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:

1. 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.
2. 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.
3. 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.
4. Drive-by Inspections: FHA requires full interior/exterior inspections. Exterior-only or “drive-by” appraisals are not allowed.
5. 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.
6. Graffiti Removal: FHA states graffiti on the house must be removed because it is a safety issue.
7. 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.
8. 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.
9. 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.
10. 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.

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?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Here is a quick video of some of the most common FHA repairs I encounter during appraisal inspections in the Sacramento area. In this video I quickly talk through 25 repair items while scrolling through photos. This is good information for real estate agents, investors and home owners since FHA is so dominant in the market. I hope this is helpful. Watch the video below (or here) and check out other FHA appraisal articles if you wish. Any questions or insight?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Let’s talk about sliding glass doors for a minute. I wanted to bring up two repair issues I see frequently during FHA appraisal inspections in the Sacramento area. I notice these issues in not only foreclosure sales, but also investor flips. Why does this matter? FHA is very specific about a property needing to meet certain requirements, so having a home in “FHA shape” before it lists on the market will help eliminate re-inspection fees by the appraiser, which effectively removes one more potential delay in closing escrow.

Broken Glass: One of the things you hear constantly about FHA loans is the importance of “health and safety.” So we must ask the question: Could it be a safety issue if there is one pane of glass broken on the sliding glass door with shards of glass sticking out? The answer seems obvious, right? This could be a safety risk for occupants – particularly children. The seller will need to cure the problem by removing the shards altogether or ideally replacing the glass pane. It’s actually easy to miss things like this, so it’s important to look closely at a sliding glass door.

Broken Locks: In addition to a focus on “heath and safety”, the basic concept of meeting FHA minimum requirements is that everything must work as it is designed to work. For example, a window that is supposed to open must open, and a built-in appliance should do what that appliance is designed to do. This means if you have a sliding glass door that is supposed to lock, it should do just that. If the seller is putting a 2×4 in the sliding glass door track to keep the door shut, that’s not okay. In the case below, the lock is missing altogether, so a new working lock will need to be installed before the close of escrow.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including Top 10 Repair Issues for FHA Loans and Do the Appliances Have to be Working for an FHA loan?

Any questions, stories or insight?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

It seems like most of us in the real estate community are on the same page that a property built before 1978 with a defective paint surface will require repairs for an FHA loan. We know lead-base paint was used in the United States before 1978, so there is a health and safety risk present when the paint surface is defective. This makes sense and it’s pretty much common knowledge.

What about after 1978? But what about a property built after 1978 that has a defective paint surface (chipping, peeling or flaking paint)? There is much confusion in the market on this point among lenders, real estate agents, home owners and even appraisers. Does FHA require repairs for a defective paint surface for a house built in 1979, 1993, 2005 or anytime after 1978? The answer is YES, but not because there a “health and safety” issue due to the potential for lead-base paint. The issue here is promoting economic longevity for the property since bare wood can lead to decay, which does not promote the longterm health of the property.

FHA’s latest Valuation FAQ on 2-28-12 (click here for PDF link):

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

Page 6 of Appendix D in Handbook 4150.2 states, “For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint. For all FHA insured properties, correction is required to all defective paint surfaces in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35.” The appraiser is further instructed to provide a detailed description and identify the exact location of any deficiency under “physical deficiencies” affecting livability. The appraiser is required to condition the appraisal on the “repair” of any noted lead based paint deficiencies.

As noted in mortgagee letter 2005-48, defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected will require automatic repair.

Here is a video I did in 2010 on this very issue of pre-1978 vs post-1978. Watch below or here.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including not leaving paint chips on the ground when curing the defective paint surface and even potential options for handling the cost of the defective paint surface.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Here are two examples of pools that didn’t make the cut for an FHA loan until repairs were made. The repairs helped show the pool’s equipment was working properly and eliminated a safety issue too. Moral of the story? If you have a pool that is not filled or has green water, make sure the water is clear and pool equipment is working as it should before the appraiser gets out there.

I hope this was helpful. Let me know if you have any questions. I’ve written quite a few FHA appraisal articles in case you wish to learn more about what to expect during the appraisal process in the Sacramento area.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

I wanted to share some photos of five common FHA condition issues I come across during appraisal inspections. If you see something like this at a property you’re selling or buying, it’ll likely require correction before FHA will guarantee the loan.

Green Pool Water: Yes, this is deemed a health issue. The water shouldn’t be green, right? Besides, if you cannot see the bottom of the pool, you never know if there is damage at the bottom anyway.

Empty Pool: An empty pool might be a skateboarder’s paradise, but it’s an obstacle to obtain financing due to being considered a safety issue. A pool like this one (covered, but empty) typically has to be filled up before the close of escrow. The lender will most likely ask the appraiser to go back out to the property to verify the pool has been filled (not verify whether it is actually working like it should since most appraisers aren’t pool experts).

Paint Cans Hiding in the Crawl Space: There is no rule from FHA saying paint cans cannot be in a crawl space, but when I see something like this, it’s a red flag because chemicals should not have the opportunity to seep into the soil. Since calling out potential health or safety issues is sometimes a subjective decision for the appraiser to make, it’s important to contact HUD on occasion as well as reach out to fellow local appraisers to say, “would you call this out too?” In this case, all that needs to happen is for the containers to be removed from the crawl space. That’s easy enough, right? By the way, regarding the attic and crawl space, a bit of debris is fine, but anything excessive could likely be an issue requiring repair.

Security Bars without Safety Release: If there is no safety release mechanism on a set of security bars, that’s an obvious safety issue that’ll need to be corrected before FHA can guarantee the loan. Usually the bars are removed and then the appraiser will go snap a photo to show the lender the bars were removed.

Dangling Wires: Electrical wires hanging from the ceiling or walls is a big deal since even small wires can cause a huge jolt and be life-threatening too. If you see wires like this in a house heading toward FHA financing, expect to have to solve the problem by installing a new fixture (or doing electrical work if need be).

I hope this was helpful. Let me know if you have any questions. I’ve written quite a few FHA appraisal articles in case you wish to learn more about what to expect during the appraisal process.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

If you know anything about FHA loans,  you know a defective paint surface is something that needs to be cured. If the exterior of a house has chipping, peeling or flaking paint, it can be a health and safety issue if the house was built before 1978 due to a potential for lead-base paint exposure. If you didn’t know, FHA has an exhilarating 51-page manual for how to properly cure a defective paint surface (PDF). This is just the type of ready you love to do, right?

DO NOT LEAVE PAINT CHIPS ON THE GROUND: If you’re dealing with a defective paint surface, make sure you or your contractor scrape away any defective paint and then completely reseal the surface with new paint (or some sort of HUD-approved sealant). Moreover, DO NOT leave paint chips or any defective paint dust or residue on the soil. This might seem like a minor point, but you don’t want to have to deal with potential environmental consequences for lead-base paint touching the soil, right? The appraiser cannot verify the paint problem was taken care of if there are paint chips all over the place on the soil.

This is why I include something like the following in my lender reports:

The appraiser noted a defective paint surface on the southern portion of the house near the roofline. All this portion of defective paint should be properly scraped and there should be no bare wood after scraping. The surface should be repainted or sealed according to FHA standards. As always, there should be no paint chips or paint dust left on the soil when the issue is cured.

I’ve written quite a few FHA appraisal articles in case you’d like to know more. Let me know if you have any questions.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

I was interviewed yesterday by Sacramento Realtor Tamara Dorris on her internet radio show to talk briefly on the nuts and bolts of FHA appraisals. With her permission, I turned the 10-minute interview into a YouTube video to further share. These are some of the basics of FHA appraisals and may give you some insight into what an FHA appraiser is looking for during an appraisal inspection. I also have quite a few FHA appraisal articles written that you can check out. Watch the video below (or here). Enjoy.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Might this ceiling fan be a safety issue for an FHA loan? What do you say? No biggie or an issue that’ll require repair before the loan can close? Have a look at the brief video below (or here) and let me know what you think.

If you said yes for being a safety issue called out in an FHA appraisal report, you are correct. FHA is primarily concerned that everything in a house works properly, there are no health and safety issues and there is a sense of economic longevity for the house too. Had I continued the video for a bit longer, you would’ve seen the fan shake even harder. If you don’t think it’s a safety issue, would you put your child’s bed underneath a fan like this? Probably not.

While an issue like this needs to be corrected before an FHA loan can be guaranteed, it’s really not a big-ticket item. Either the fan needs to be repaired or replaced or a cheap light fixture can be purchased and installed in its place. This is an older property and ceiling fans didn’t even exist when the property was built, so a simple light fixture is entirely reasonable in this case. This is not just my opinion either, but the Santa Ana FHA Home Ownership Center said the same thing during a recent phone conversation.

NOTE: This does not mean all wobbly ceiling fans will need to be repaired or replaced. This is where the FHA appraiser is subjective and has to use good judgment according to FHA guidelines and/or the spirit of FHA.

Let me know if you have any questions or insight. I hope this was helpful. You can see more FHA appraisal articles here.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

What is a firewall? Defined by Wikipedia, it’s ”a fireproof barrier used to prevent the spread of fire between or through buildings, structures, electrical substation transformers, or within an aircraft or vehicle.” The firewall shown below is a standard one found between a garage and a house as this wall serves to help stop the spread of fire. Do you see a problem with this firewall though?

The cost to repair the large hole is very minimal, but it’s still a safety issue for occupants, which means it is something that needs to be repaired for an FHA loan. I’ve actually seen this issue twice in the past month on investor flips in the Sacramento area, so clearly it’s not something that is being cured every time by sellers before the appraiser heads out.

Here is a photo of a “before” and “after” of a firewall breach. Have you seen a hole as such cause problems before in a house? Might rodents be able to get into the house this way too? Can you think of any other issues this might pose?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

If you know anything about FHA loans, you’ve likely heard the phrase “health and safety”. That’s because FHA has requirements for a property to be safe and sound for occupants. I shot the video below at a recent inspection. While it may not be a “health and safety” issue if a stair railing has a tiny wobble, this rail is definitely ready to give at some point, which means it’s an obvious safety issue that needs to be addressed before the loan can close. One interesting note is that the listing agent said some of the potential buyers for this property actually backed out in light of being turned off by the wobbly staircase. So on top of being an FHA issue, it’s been somewhat of a deterrent in the market too. See a previous post if you’d like to read about the 10 most common FHA required repairs.

Any thoughts or questions?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Do you want to play a little game called “FHA Roof Trivia”? Nah, I didn’t think so. Me neither. Let’s take a look at some common questions though pertaining to roofs and FHA minimum property standards. I hope this is helpful to answer some questions you might have as a buyer, seller or real estate agent.

Q: How many layers on a roof will FHA accept?
A: “FHA will accept a maximum of 3 layers of existing roofing. If more than 2 layers exist and repair is necessary, then all old roofing must be removed as part of the re-roofing. (4905.1 REV-1, 2-12)”

Q: How much life does a roof need to have left?
A: The roof should have at least two years of physical life left. If the roof does not have two years or looks like it is in really bad shape, the appraiser should call for a roof inspection. This means the roof will have to be certified by a professional to have at least two years of physical life left. If the roof has less than two years of life, then it must be repaired or replaced.

Q: Is it a problem for an FHA loan if the roof is flat?
A: As long as there are no issues pointing toward potential roof problems (such as stains on the ceiling or badly rotted eaves), there is no reason to be alarmed. Straight from HUD, “FHA no longer mandates automatic inspection of flat and/or unobservable roofs. The appraiser must note in the appraisal that he/she could not adequately observe the entire roof area and state which area(s) were unobservable. As with any other type of roof the appraiser is to look for signs that would indicate a possible roof problem. Based on the information reported, either the appraiser or underwriter may call for a roofing inspection.”

Q: Do appraisers have to inspect the attic for an FHA loan?
A: Yes. The appraiser must do a “head and shoulders” inspection of the attic. FHA states the home owner is responsible for making sure the appraiser has clear access. What are appraisers looking for in the attic? Read a previous post HERE. By the way, I’m curious if you find most appraisers to be actually inspecting the attic. I heard from a Sacramento home inspector recently that he has never seen an appraiser with a ladder at an inspection. Hmm…

Q: Are gutters required for the roof?
A: No, they are not. However, as the HUD Handbook 4150.2 tells appraisers: “Check for readily observable evidence of grading and drainage problems. Proper drainage control measures may include gutters and downspouts or appropriate grading or landscaping to divert the flow of water away from the foundation. If the grading does not provide positive drainage from the improvements, make a repair requirement. Note any readily observable evidence of standing water near the property that indicates improper drainage.” In short, gutters are not required, but on the other hand one of the potential repairs to solve a drainage problem could be gutters.

I hope you feel like you know a bit more about the way FHA views a roof now.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.