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.

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.

We all know pets often need a way to get from the Laundry Room to the garage, but installing a doggy door on a fire door is not a good move to secure an FHA loan. Why is that? A fire door is designed to reduce the spread of fire, but when a pet door is installed in the fire door, the firewall is compromised. If you’ve ever cared to look, there should be a difference between the door to the garage (fire door) and many of the other doors in your home. Whereas bedroom doors are often hollow on the inside, the fire door to the garage is solid because it is designed to stop fire. All things considered, this is a safety issue in the eyes of FHA, so the problem must be cured according to FHA minimum property standards. A small hole may not seem like a big deal, but fire doesn’t discriminate against size, does it?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

An empty pool might seem like no big deal, but it doesn’t do much to propel a loan forward because of the challenges it presents. What are the risks?

1. Someone can fall in and break a [fill in the blank].
2. Standing water is an invitation for mosquitos, which then increases the risk for mosquito-transmitted diseases such as West Nile Virus. 
3. The swimming pool could sustain damage from not being filled over time. 
4. Lastly, how can you really know if a pool is working properly if it’s empty?  

I recommend talking with a trusted loan professional to understand specific lending guidelines, but I will say in light of the risks above, most lenders will want to see pools filled and functioning properly because of the health and safety risks associated with an empty pool. I’ve had a couple of instances lately for both FHA and conventional loans where my client wanted me to head back out to verify repairs were made to a pool (after I noted green water and/or missing pool equipment). I am not a pool specialist of course, so I am very careful about what I can and cannot verify as a real estate appraiser.

I’d be curious to hear your experience with pools and real estate, and also if you have any other risks to add to the list above. 

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook. 

Here is some helpful information on condominiums for FHA/HUD, whether you are in the Sacramento area or elsewhere. I wrote previously about FHA condo issues here. This is straight from HUD:

Effective on Monday, June 14, 2010, all condominium inquiries, telephone and email, must be submitted to the FHA Resource Center at: (800)225-5342 or by email at info@fhaoutreach.com. The FHA Resource Center will provide responses to general inquiries received from consumers and industry partners. Responses requiring technical knowledge will be escalated to the jurisdictional Homeownership Center for review and response.

Before contacting the FHA Resource Center, it is recommended that you use
the following resources to search for answer(s) to your question(s).

1. Check to see if your question is already included in the Condo FAQs currently posted on the web here (pdf).

2. To determine if a project is on the FHA Approved List or to obtain the FHA concentration please visit this web page and input the condominium project name or the Condo ID. It is recommended that only the first few letters be entered to return a complete list. If the project is not listed it will require FHA approval.

3. FHA provides the FHA Concentration percentage information on the Condo List Screen. If the percentage is not identified or incorrect, provide documentation to the jurisdictional Homeownership Center so that the system can be updated. This information would include the first two pages of the appraisal or a letter from the HOA providing the number of units in the project.

4. What is the process for obtaining project approval? For documentation and processing requirements, please refer to ML 2009-46B and ML 2009-46A, which can be found on this website (or directly as a PDF here and here).

Good luck everyone. I hope you find what you’re looking for. Make sure to read all the information from the above links. Keep me posted if there is ever anything I can do.

I get a lot of questions about FHA / HUD standards and what a property needs to qualify. Here’s the deal: FHA is primarily concerned that everything in a house functions properly and that there are no health and safety issues. FHA continually says, “Soundness, Safety & Security” as their motto. As an FHA certified real estate appraiser, the inspections I do are based upon guidelines from the United States Department of Housing & Urban Development (HUD).

I was in the town of Locke a couple weeks ago and I snapped the following shot of a property I happened to pass. Do you think this property would qualify for an FHA loan?

Here is a sample of some of the things I look for while on an FHA inspection:

• Appliances must be in functional use. If there is a hood, it must work. If there is a dishwasher it must work. If there is a stove, it must work…
• The heating unit must be in working order (and AC if applicable)
• Paint must not be chipping, peeling, or flaking on homes built before 1978. There must be no defective paint or exposed wood for properties built after 1978. If there is an issue with paint, it needs to be cured properly by actually scraping the paint instead of just painting over with new paint.
• The water pressure must be adequate for the house. Appraisers flush toilets, turn on all faucets and ensure that both hot and cold water are working.
• The water heater must be in working order.
• The attic must be inspected and we make sure that there are vents, no evidence of a previous fire, no exposed or frayed wires, and that sunlight is not beaming through.
• Attics and crawlspaces are to be viewed at least with head and shoulders into them (if present)
• The crawl space must be inspected and we make sure there is not excessive debris or signs of standing water or any other foundation support issues.
• Electrical outlets must work.
• Toilets must flush and be mounted
• No leaks in the roof.
• The carpet does not have to be perfect (stains or minor tears okay). If there is a health or safety issue with the flooring, then that is a red flag. 
• A house does not need new interior paint.
• Windows cannot be broken. Cracks can be okay so long as there is not an issue with safety, soundness and security.
• No dangling wires from missing fixtures.
• Water heaters must be properly attached with straps (local code says that water heaters need to be strapped and FHA requires water heaters to meet code).
• Stoves are not required unless they are drop in stoves.
• FHA doesn’t require air conditioning, insulation, smoke detectors or the like, but if they are there they must work as they were intended.

The photo above clearly demonstrates there might be a safety issue with the structure. It doesn’t look very sound, does it? Do you see any other violations of HUD minimum standards?

This type of knowledge is vital for first-time buyers, sellers and investors especially. Please let me know if you have any questions. I am glad to help buyers, agents, investors, brokers and anyone else know more about FHA standards and the appraisal process. FHA loans have really dominated the market in the Sacramento Region, so it’s important to be aware of potential issues that might make or break a deal. You can reach me at 916-595-3735 or ryan@lundquistcompany.com.

I wanted to put up a brief post to talk about neighborhood boundaries and how important it is to know the local market when appraising (or hunting for real estate). Often times it is obvious when a new neighborhood or housing niche begins because the style of homes change or there is a natural barrier such as railroad tracks, a main street, commercial property or a highway. Other times it is not so obvious to the unfamiliar eye.

The image below is a portion of Sacramento known as Tahoe Park South (blue), Tallac Village (green) and Fruitridge Manor (orange).

According to our uniform appraisal standards called USPAP, appraisers are to select the best available comparable sales when doing an appraisal. Lenders know this and so most of the time they have a standard requirement for the “comps” to be located within a one-mile radius from the subject property (NOTE: the best comps are not always located within a one mile radius). So when applying this lending guideline, in theory an appraiser can value a property location in the orange section (Fruitridge Manor) and then find comparables in the blue portion (Tahoe Park South), right? Well, not really because even though these housing areas are well within a one-mile radius of each other, they are actually much different market areas as illustrated with the data below.

Tahoe Park South (blue):

• 5 sales over past 90 days
• 32 sales over past 12 months
• Median price over past 90 days:  $225,000
• Current Actives:  11

Tallac Village (green)

• 20 sales over past 90 days
• 59 sales over past 12 months
• Median price over past 90 days:  $89,500
• Current Actives:  31

Fruitridge Manor (orange)

• 13 sales over past 90 days
• 66 sales over past 12 months
• Median Price over past 90 days:  $85,000
• Current Actives:  31

The most obvious difference above is the striking change once you head North of 21st Avenue from Tallac Village to Tahoe Park South. If one were comparing property values between the areas above, the median price levels alone tell you that property in the current real estate market in Tahoe Park South sells for a great deal more than Tallac Village or Fruitridge Manor. For more information on the Tahoe Park area, click HERE.

We can also see that Fruitridge Manor and Tallac Village have a similar median price level and so they appear more similar on paper. However, one important difference to note that comes from knowing the local market is that the bulk of houses in Tallac Village are block construction (yes, houses made out of block) in comparison to the typical stick-built houses in Fruitridge Manor.

Knowing local neighborhoods is important when buying a house, investing in real estate and definitely when appraising properties. This post is not meant to be exhaustive, but only briefly informative. If you have further questions or any real estate appraisal needs, you are welcome to contact me at 916-595-3735 or ryan@lundquistcompany.com.

www.SacramentoAppraisalBlog.com A Lesson in Neighborhood Boundaries: Tahoe Park, Tallac Village & Fruitridge Manor in Sacramento

What does HUD say about water heaters? First and foremost, the water heater must work and must be able to do its job. This is not a revolutionary concept, but if there is no hot water coming out the faucet when there should be, then clearly there is an issue to be solved. Testing the water temperature and water pressure is something that appraisers do during an FHA property inspection. Secondly, if local code states that the water heater must be strapped, then HUD requires a strap. 

If you have any questions about FHA standards or FHA real estate appraisals in the Sacramento Region, give me a call at 916-595-3735 or shoot me an email at info@LundquistCompany.com.

www.SacramentoAppraisalBlog.com What does FHA say about water heaters?

Website statistics show that someone found this site today when searching for the answer to the following question: What are FHA guidelines for removing lead-base paint? I’d like to shed some light on the answer and hopefully help any future readers too.

As indicated on the HUD website in tremendous detail, whether you are in Sacramento or anywhere in the United States, there is a very specific methodology for the abatement of lead-base paint. To learn more than you probably ever wanted to know about lead-base paint removal, you can DOWNLOAD a PDF document from HUD (50+ pages). In short though, the answer to the question is that a defective paint surface (chipping, cracking, flaking, peeling) on a property built prior to 1978 must be cured by a proper method of scraping and then painting afterward. Careful attention must also be given to flakes of paint falling on the soil during removal. Thus you can see that it doesn’t jive well with HUD to simply slop on some new paint over a cracked or flaking surface and then call it cured. The defective portion of paint actually has to be properly removed and then the bare wood must be painted. Does that make sense?

Why do you think they HUD is so concerned about lead-base paint anyway?   

If you have any questions, feel free to contact me at 916-595-3735 or www.lundquistcompany.com or LundquistCompany@gmail.com

I find myself doing quite a few FHA appraisals these days in light of the enormous popularity of FHA loans in the Greater Sacramento Region. Sometimes properties are able to easily meet FHA minimum standards, but other times houses might need just a little work (or quite a bit) to bring them up to the level required by HUD.

The primary concern of HUD as it pertains to a property is with safety, soundness and security. The basic gist is that for HUD to guarentee a loan, a property must not have any issues that present a threat to safety, security or soundness.  Minor cosmetic issues don’t fall under this category, so a crack in a window or a stain on carpet or a missing doorknob are not a big deal for FHA loans (so long as there is no threat to safety, security or soundness). Other condition issues though such as peeling or chipping paint, an inoperable heating system or a leaking roof are a big deal to HUD because they do impact safety, security or soundness.

At times it is easy to think that appraisers are being knit-picky over minor issues that could easily be overlooked while inspecting a property, but take a look firsthand what FHA requires for repairs (click HERE).

If you ever have questions about FHA-related required repairs or FHA real estate appraisals in the Sacramento Area (multiple counties surrounding Sacramento), you are welcome to contact me at 916-595-3735 or www.lundquistcompany.com or LundquistCompany@gmail.com  Lastly, you may find HUD to be very helpful when you call (800)CALL-FHA