Can a cracked or raised driveway be an issue for an FHA loan? If the damage is deemed a safety issue for whatever reason, then it is something that will require correction. However, if the damage is minimal and hardly noticeable, it shouldn’t be a big deal. Let’s look at a real life example.
The tree roots in this front yard in Sacramento have made a very obvious impact to the driveway. It’s not hard to miss damage like this, right? The photo above does give the illusion that the raised driveway is truck-sized, but my shoe below helps show more clearly that one slab has been pushed 3-4 inches higher than the other slab. It’s always important to bring in an object to the photo to help give perspective (maybe a ruler, quarter, dollar, etc… or shoe).
A trip hazard is a subjective call to make by the appraiser and not necessarily an automatic repair, but in this case above my sense is that this is a legitimate safety issue. There is confusion over trip hazards due to HUD Mortgagee Letter 2005- ML-48 (pdf) which indicates that trip hazards are no longer an automatic repair. Sometimes this is interpreted to mean that trip hazards are no longer an issue to be called out, but that’s not really the intent of FHA because guidelines require a property to be free of all known hazards and adverse conditions that might affect the health and safety of occupants.
Do you think a driveway as such might be a safety hazard? Have you encountered difficulties funding a loan due to a driveway like this?
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.
Real Short Sale Scenario: The bank has stated they’ll accept a price for a Sacramento property at $200,000 based on a BPO. A “BPO” is a “Broker Price Opinion,” which is a valuation by a real estate agent (broker) of the subject property. This can be done from a desktop or a full interior or exterior inspection. In this case, I’m not sure what exactly was done or when the BPO was completed either, but the Listing Agent trying to sell this property ordered a full appraisal from my company to help show the bank what true market value looks like. The hope from the agent’s standpoint is that the bank will budge on their price. This particular agent orders appraisals from me regularly, so obviously this bank listens.
BPOs and Appraisals: Let’s back up for a second. Sometimes banks are ordering both appraisals and BPOs behind the scenes so they are equipped to make decisions about their inventory. The bank mentioned above is not ordering appraisals though, so each bank obviously has its own practices. Clearly banks want to minimize their losses, so they don’t want to accept an offer far below market value (well, you’d think). As an appraiser, I have banks hire me directly to help them decide on whether to accept an offer or not. In these cases my appraisal has nothing to do with the buyer or the buyer’s loan either, but it’s all about the current loan on the property (loss mitigation). On the other side, I do appraisals for real estate agents and home owners who are trying to doing a short sale. They hire me when the bank is seemingly out of touch with the market and only willing to accept offers far above real market value. Maybe the bank is relying on bad information for pricing or an outdated BPO or appraisal?
First off, make sure you are working with a local real estate agent. It’s nice that your cousin in San Diego is a Realtor, but does your cousin understand the local market in Sacramento? No offense to your cousin of course. 🙂