I had a call last week from a woman who wondered where she could find out if certain homes for sale were approved for FHA financing. As I talked to her about the fact that, for the most part, it takes an appraiser to determine whether or not a home qualifies, I tried to explain what she would need to look for so she could avoid paying for appraisals on property that may not qualify. It occurred to me that there was a good blog post in that explanation so here it goes!
FHA appraisers do a different type of appraisal than appraisers for conventional loans. They are more concerned with the health and safety of the borrowers. They look at the standard things that all appraisers look at, and they take it a little further. FHA is not only concerned with the property value but is also concerned with things like handrails on steps, broken windows, lack of screens, evidence of rodent infestation and other issues that don’t affect a normal appraisal to the same degree. If the house was built before 1978 and may have the potential for lead based paint, the FHA appraiser looks for peeling paint. The FHA appraiser needs to see that the bedrooms have egress in case of a fire, the windows have to work and if there are burglar bars they need to have the code approved methods of opening them from the inside in case of a fire. They want to see smoke detectors. The FHA appraiser needs to see window screens if there isn’t central air conditioning. They look at the remaining life of the roof and the furnace and hot water heaters and want to see a stove in the kitchen. The utilities have to be on during the appraisal and they check that the various components are working. The appraiser looks for evidence of environmental contaminants like asbestos and mold. The FHA appraiser looks for earth to wood contact and other evidence of termites.
So for the most part, the home has to be livable. If the carpet can be cleaned or the house needs paint to make it clean and fresh, this will not generally be enough to cause the appraiser to require that the work be done before closing (or after). If you want to read the actual FHA appraisal guidelines you can see an article from HUD here. The basic HUD website can be found here and the FHA Appraisal page has an overview of the entire process.
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I have several issues going on with an GA appraisal that was ordered by the buyers mortgage company. It is about 6,000 less than the contract/selling price. The appraisal does not include a new roof, gutters, down-spouts, new granite kitchen counter tops, new granite counter tops in both bathrooms, new tile floor in master bath and tile around tub, new shower in master bath, new wood vanity in master, new slate tile in kitchen, laundry room, and recently extended walk in pantry with slate tile on floor. New/upgraded kitchen faucets, new/upgraded shower faucets, bathtub faucets and bathroom sink faucets, new undermount sinks in kitchen and new double porecelin sinks in master bath and new porecelin sink in 2nd bath, freshly painted exterior and all rooms interior, new stainless steel applainces,, all new light fixtures through out entire home and 3 new ceiling fans, has my home listed as a foreclosure and it is NOT A FORECLOSURE, has the home on a slab instead of a crawl space, has the land listed at 0.06 acre instead it should be 0.47 acre. He even has the date of his inspection WRONG. Both realtors involved and myself have asked for a review and an adjustment of the property. The only thing that he is willing to correct is the issue of the land/acre. He said this is all he thinks my home is worth in his opion, because all i’ve done is bring the house up to date. I don’t know what to do being that he has filed this appraisal with the state of GA and i am stuck with this appraisal for 90 days. Please give me some advice pretty fast, if at all possible. Thanks
Cynthia,
One thing to understand about appraisals is that the appraisers do not get to go into the houses of the comparable properties to see what the upgrades are in the comps. So they don’t give you credit for individual upgrades, they just rate your house (average, very good, excellent etc).
Unfortunately what you are doing is basically all there is to do. Did you go back to the appraiser for the review or the manager of the company that ordered the appraisal for a appeal/review? The banks go to a appraisal company that orders the appraisal from a bank of appraisers and the manager of that company is where you appeal.
I am starting to hear of some people who have had some success with appeals. I would suggest you try to find comps of homes with more of the renovations like you have which have sold for more money. They have to be similar in age and size and should have closed ideally in less that three months ago or at most 6 months ago. They also have to be close to yours (within a mile). Sometimes if you actually have better comps than the appraiser used it is easier to convince someone to adjust.
Good luck!
Dan, Thanks so much for taking the time out of your busy life to give me such good advice. I have requested a review with the appraiser and he corrected his mistakes, but says that he can’t change the price of the appraisal. I contacted the 3rd party national vendor that sent him to my home for the appraisal and that manager said that if the appraiser want correct the price of the home, then he can send out another appraiser . Can the price of the appraisal be changed if the appraiser already submitted it to The State of GA? I guesss we’ll have to see what happens. Thanks again, Cynthia
Glad I could help! Let me know how it works out. I am also in Georgia so I would be interested if you can get an adjustment.
We found a house, but it has no kitchen. it’s also not in the best condition but it’s livable. I know it cannot be appraised in its current condition. It’s not livable without the kitchen.
what can be done. Can you buy the house, and contract with the seller that we will add the kitchen, but if escrow or sale falls through for any reason, we can take what we put in, back out? It’s a short sale so we know there is nobody on the other side motivated to install a kitchen. Only thing left is cash purchase but at $500k not many cash buyers with that much loot.
You can buy it with a rehab loan. Depending on which part of the country you are in, you may be able to use the FHA 203K loan. Different areas have different loan limits for FHA. If they aren’t high enough in your area there are conventional purchase rehab loans available. You have to used contractors that are approved by the lender and go through some hoops to get the loan, but that would be one way to purchase.
I think that it would be dangerous to put a kitchen in and then try to remove it if the loan doesn’t close. For one thing the cabinets etc would not have much value after having been installed and removed. Another problem is that the installed items become fixtures and technically then belong to the owner. Just like if a tenant installs something while renting, they do not automatically have the right to remove it when they leave.
Hi my name is Tarl i just had a appraisal done on a house im trying to buy. The appraiser refused to provide me with a copy and said that the mortgage company would have to provide it and they where only obligated to do so 72 hours after closing. can you tell me the laws on this.
thanks
Well I am not sure what the laws are, (not being a lawyer) but I have never heard of someone getting the appraisal until three days after the closing, after 24 years in the business. You paid the mortgage company for the appraisal and they paid the appraiser so I understand why the lender gets it from the appraiser, but three days after closing? I never saw that.
Hi, My wife and I just had an appraisal done on a house yesterday for an FHA mortgage and I’m not sure the appraiser liked what he saw. First I’ll give you a little background. Homes in this neighborhood typically go for about 360-460k. On zillow.com the home we’re looking at is shown as about 366k. The seller is a both a longtime friend and a volunteer firefighter. He picked up and moved to another state and wants to see his house go to another fireman, so he is selling the house for 310k. I had no problems whatsoever qualifying for the FHA loan. We had the appraisal done yesterday, I think the appraiser had issues with a few things. A set of stairs probably needs railings, and there might be some very minor cosmetic issues that the FHA inspector pointed out that FHA may not like. There is nothing that the seller and I couldn’t take care in a weekend (he’s built many homes for habitat for humanity and I’m very handy… this stuff is cakewalk and inexpensive). Here’s my question: Do they basically make their decision and that’s it? Or are they at least slightly reasonable and make some demands and come back for a re-inspection?
Hey John,
I am sorry it took so long to reply. Normally I get an email when someone posts on my blog, but somehow that stopped happening!
If they have issues with the house they give you a list. You can correct the items and they will come out and reinspect. Not a big problem normally if you can do the work!
During an appraisal for FHA, is the land value considered. I am purchasing a home on 2.5 acres in CA. I was told FHA does not consider the land, is this true?
Well I start every other answer by saying “I am not an appraiser, I am a Realtor” I did take the basic appraisal course but that was over 20 years ago and I have done no continuing education. But I have been involved with many closings over the years and my opinions are based on my observations.
When an FHA appraiser values a home on 2.5 acres they normally look for comparable properties. That would be similar homes on large tracts of land. They don’t give extra weight to homes on larger parcels or take off some of the value for homes on 1.75 acres, they just find generally similar properties and compare the houses. So normally they wouldn’t compare it to a home on a 1/10 acre tract in a subdivision.
Hope that helps!
We are selling a home. The appraiser has concerns with an old unusable barn on the property.There is a hole in the foundation of the wall.The rec. someone to come and look at it to re enforcethe frame. If it can be fixed does the buyer or seller pay for this? What happens if it is un fixable?
Do we know if a buyer can use the fha 203-k streamline to mitigate mold on a Fannie Mae owned property We already have the appraisal and there is room on the value but we are hearing conflicting points. Some say no because it’s a service being provided and not a repair. We already have a bid in hand to mitigate.
Sorry I missed this question earlier! You can include mold remediation in a 203-K loan. Normally the appraiser will require that it’s dealt with before closing if it’s not included in the renovation bid.
How long does it take to get an appraisal done these days? I’m trying to purchase a home using FHA, and I’m a fully qualified buyer. But the appraisal has been ordered for 2 weeks now. My new job starts in 4 weeks, and I’m getting fed up. My realtor says it’s the new Federal Regs, but I’m getting very stressed. What can I do?
The best thing in this circumstance is to be patient. I know it’s hard, but pushing may do more harm than good. The lender can put in an inquiry to see if the order got lost in cyberspace, but that’s as far as I would go.
My son is in the process of buying a foreclosed property and has been approved through FHA. The house has to have a foundation inspection. The foundation is as follows: a concrete slab with 4 blocked walls and piers. The walls are approximately 6 foot tall, resemballing a basement. None of it is underground. We found out from our realator that the piers have to be wrapped because they are not concreted between the joints of the blocks, they are dry stacked. This is a manufactured home and is tied down. The cost to fix the piers is $3000. The bank does not want to pay for this. Do the piers have to be wrapped or is what is there adequate? This home is located in Kentucky.
Cindy,
Sorry but I do not know the answer to this!
Hi trying to buy a modified A frame home in OK. I am conserned about the apprasial because the home is unusal for this area. The real estate agent tells me that I might not be able to get an FHA loan because they can not find a property to compare it to. Any way to get around this?
Not that I know of, the only way to find out is to pay for an appraisal and see what happens. I have seen homes appraise with no obvious comps and have seen homes with lots of comps not appraise. ..no rhyme or reason!
We are scheduled to close on a REO home this Friday. After an appraisal and inspection, the listing agent is still not getting us answers like: 1. the thermastat does not work, are they required to fix this? 2. There are electrical units not in approved electrical boxes (they are literally just hanging out, taped together with electrical tape). Is this FHA approved? 3. The deck is 100% not up to code. Is the bank required to fix this prior to close? 4. there are 4 leaks in the attic, are those FHA required fixes? 5. the heating and a/c show “signs of heavy rust” in our inspection. Are they required to service and clean these?
We are frustrated beyond belief b/c our “realtor” has never dealt with this sort of situation, and frankly does not have a clue what to do and what questions to ask. Can anyone simply point me to the FHA requirements, or even tell me the answer to my above questions?
THANK YOU!!!
The document that would answer these questions would be the contract for purchase of the property, and all I can give you is some ideas based on how things generally go.
When you have an inspection and an FHA appraisal, the repairs that are suggested by the inspector and required by the appraiser are NORMALLY not assigned to one party (like the Seller) to repair. The appraiser is stating that they will not make the loan unless the items are either repaired prior to closing, or included in a rehab loan and addressed by the Buyer after closing. The appraiser normally does not say who does the repairs.
Typically your contract will specify what your rights are under the inspection contingency. I think if your Realtor doesn’t know the answers to these questions then you should call the Broker of his company and discuss your options with him (or her)!
We just had an appraiser come out to the home we are wanting to buy. The bank accepted our offer and all the paper work is done, but after the appraiser looked at the home he decided to inform us that the deck needs repaired when we clearly stated that we are just going to tear it down because it’s unusable. Can’t we just sign a waver stating that we won’t sue if we are injured by the deck? We just want to close on this but the deck is stalling us when we are just going to tear it down.
Thank you!!
Normally it has to be either repaired or removed before closing. Typically with these types of requests they will not accept a promise of repair/removal after closing because they do not want to have to enforce the follow up and checking to see if it was completed. Either you will have to get the owner to repair or remove, or you will have to get permission do do either before closing. In the event that they let you remove it you will have to deal with what is left after you remove it. These could be building steps, if there are steps necessary from a door that used to open onto the deck, handrail, removal of all the posts and repair of any gaps in the siding or flashing where the deck used to attach to the house.
The other option would be to change the loan to an FHA 203K loan that would let you borrow the money to either deal with removal of the deck or installation of a new deck.
Their argument is that the low down payment does not give them enough equity to do these repairs if they let you close without the repairs and you never made the repair and let it foreclose.
We are sellers in Michigan who are trying to sell our house to someone who is using an FHA loan. The buyers had an FHA inspection performed this week. His report was a huge joke. It was full of crazy things like C/A needs to be replaced (he claimed it was over 15 years old) when it is only 9 years old. Said there was a broken window when it was just the privacy tint on a window facing the neighbor in the kitchen was peeling. How he even made that mistake I don’t know? I wish I had been here with him.
Anyways because we know half this stuff is CRAZY. We offered to pay for another inspection because the buyer got scared after reading his ridiculous report and didn’t want the house. The buyer agreed. I am wondering if this report can be used instead of the crazy one?
What are like the top 10 main inspection things FHA looks for in order to agree to the loan?
When you say FHA inspection do you mean the FHA appraisal? or are you referring to the buyer’s home inspection?
Thanks Dan for answering so quickly! Sure you don’t want to move to Michigan and sell my house.
Funny I thought it was all one but upon further “inspection” (sorry couldn’t help myself) it is the buyers inspector. Now do they turn their inspection to FHA then they send out an appraiser? The second inspection we are paying for is tomorrow morning. Would it be helpful to have some of our receipts and info on the house for the inspector. Some of the things the other inspector said wasn’t true and we have prove. Should we leave that for the inspector? The agent? The buyer?
Sorry for the delay, I usually get an email when I get a comment, but I either didn’t get it or missed it somehow!
The inspector may be interested in your receipts etc. (I know it probably already happened). The truth of the matter is that every one of them is different, and brings a different view to the table. Some are receptive and some aren’t. You have to feel them out and if they seem like they aren’t interested, don’t push it. This is true for the appraisers as well. After the inspection is complete the appraiser comes in and may have a different idea about the condition of something like the roof, than the inspector has. In any case you provide what information you have and if they seem to be pushing you away, then back off and let them finish without any imput.
Also if you lost your inspection report and can’t remember who did it is there any way to track it down on our previous agent side? Do agents keep a copy of our inspection report (3 years ago) of houses they sold?
That would be a good place to start. I am a packrat so I keep everything for years. A lot of people shred after 2 or 3 years.
Hey Dan, we have a buyer for our home, passed inspection and have been waiting 25 days now for the lender to order the FHA appraisal. Just found out today that the buyer works for the mortgage company and they seem to be the holdup. I can’t get any info from my realtor other than to be patient. I’m about ouy of patience at this time. Any advice? The home is in FL.
If you are waiting for the lender to order the appraisal, that is unacceptable. If you are waiting for the appraiser to come out, and it has been ordered, that is unfortunately kind of normal. Ask you Realtor to speak to someone at the mortgage company and make sure that it has been ordered.
If there is a kitchen set with stove in a basement, does it need to be removed before getting an FHA appraisal? thanks!
I don’t think they are going to count it as living space, but I don’t think they will ask you to remove it. If they do you can always take it out and get them back out to check before closing.
Hi we have been house hunting for a month now and it is getting very frustrating because everytime we find a house we love our agent says it is not FHA approved but most of the work is minimal like holes on the walls a few broken windows and no stove.I really love this home what can we do to get it?is there any possibilities?
I know FHA has relaxed their standards on some issues (like holes in the walls) The best thing I could suggest is to move forward, let the appraiser have a go at it and see if there are actually repairs required. I know people who have put a $100 craigslist stove in before closing, and had the appraiser come back to check it and closed.
This was rather than putting a really nice stove in which would not be covered by insurance if it took a walk before closing. Then after the closing they put it back on craigslist and got their 100 back.
Hi Dan,
God, there is so much useful info on your blog!!! Thanks, i got so many answers!
However, i still have one question: we want to buy a house with a FHA mortgage. The house is a quad-level and has some issues on the lower level (damaged ceiling – as in missing a part of it and missing part of the carpet). Now, considering that the lower level is below grade would it count for the FHA appraiser??? I mean could they ask for those repairs to be done before closing? I mention that there is enough “livable” space as there is a living room, kitchen, 3 bedrooms and 1 1/2 baths on the grade and above levels – would this count for the FHA appraiser??
Any input would be appreciated. Thanks!
As far as I know, the basement would not have to be repaired, but it is up to the appraiser that goes out. They worry about health and safety so the ceiling would have to not pose any risk to injury if more of it falls, and the carpet could be a tripping issue or mold growth if there was a leak that caused the problems.
I had a question. FHA loan and appraiser said we need to scrap and repaint the railing on the front porch. However we are planning on replacing the front porch. Can we just remove the railing. Its a very low to the ground porch. No real saftey issue if no raling?
We Recently Just got an excepted offer on a house that needs repairs. To us it doesnt seem like much that needs to be done but when I talked to my mortgage broker (who is also a family friend) She really freaked me out about the FHA passing it for a loan. The only problems it has A a broken window, old water damage on the ceiling in one of the rooms, a brick in the foundation is cracked. Are these things thar would cause it not to pass if so I want to see if we can make the repairs before the appraiser comes. Oh and i never heard till now that you need a stove there is no appliance but i have a stove i could throw in. Any suggestions or answers?
Hi Dan,
My wife and I are buying a home and the appraisal was just done. The water heater is not in working order, we lack the hot water connection on it and the bottom is rusted quite badly. The appraisal mentioned nothing of this whatsoever. Nor that it even had a water heater. Are appraisers required to make sure that it works and produces hot water? Or have I been mislead by my realtor?
Hi Dan… listed a 100 year old house that I have been slowly renovating, although from what I’ve read on your blog an FHA appraisal may only consider it being updated. It shows beautifully, but the buyer’s inspection indicated the is still some tube and wire electrical wiring in the attic. What impact will that have? Is it an automatic the old electric will have to be replaced before closing? Everything works fine in the house, all outlets, etc and the panel has been updated as has probably 75% of the house.
There is no one size fits all answer for this question. It will depend on the lender. Sometimes they ask to review the inspection and sometimes they don’t. Some appraisers go into the attic and look for this type of thing and some don’t. I think it’s safe to assume that if they find out about it, they will probably expect it to be repaired, as knob and tube wiring is generally thought to be a fire hazard.
Sorry, I meant knob and tube wiring.
I have the buyers approved fha loan but with conditions to to repair some items. If we the buyers would comply and fixed and after all the seller canceled. What will happen?
It depends on the agreement you have with the seller regarding the repairs, and how the contract is written.
My wife and I are in the process of buying a home in southwest Missouri and we were told that the loan could not go through because of the heating source of the home. The heating source is a large propane stove in the center of the house. I was told that a different heating source would need to be added before the underwriter would okay the loan. There is a place for a wood burning stove to be put in and I was wondering if this would be adequate for a FHA loan.
I do not believe that a wood burning stove would be acceptable, but that is a question for the underwriter who turned down the propane stove.
I am purchasing a home (FHA) and the lender completed an appraisal and it came in at $230,000. The purchase price on the signed contract is $250,000. I want a sale price reduction based on the appraisal and the seller (bank owned) has ordered another appraisal and this came in at $255,000. The seller is refusing to reduce the sales price to the 1st appraisal of $230,000. Which appraisal is going to be attached to the property? I understood that the 1st appraisal at $230,000 was assigned to this property and would remain with the property for 6 months. Which appraisal is the controlling appraised value? How long does an appraisal stay with the property?
There is no way I can answer your question with the information at hand. An attorney should look at your contract and the appraisal contingency to see what your rights are. Will your lender accept the Seller’s appraisal? What does the contract say regarding this? These are the questions. The answer is in the exact wording of your contract.
Talk to an attorney familiar with real estate law.
Hi, I just happened to find this blog and love the wealth of information it.
I have a question, too. We just closed on and moved into our new home less than 30 days ago. The finance company that holds our mortgage want to sell the loan to a big bank and said they are having problems because the bank wants to come in and do their own appraisal. It’s a very uncomfortable feeling having someone come in after we’ve already moved in and have hardly unpacked yet.
Do we have to approve this appraisal because the lender wants to sell the mortgage or can we ask them to deal with the appraisal that’s already been done a few months ago.
We are in the process of finishing off the basement, too, and don’t know how this would affect a new appraisal. Any help with this one would be appreciated. Thanks,
It seems odd to me. I have never heard of this and it would make me wonder if the lender was being completely straightforward with me. I don’t know if there is anything in your paperwork that would compel you to let the lender into your house for a second appraisal. I might bring in an attorney to make sure that you would have to comply and what the ramifications of not complying would be.
Hi Dan,
My husband and I are in the process of purchasing an FHA home, and the house is in great condition but downstair(below level) there is some mold and mildew on the walls where they didn’t seal the inside of the wall correctly. My husband and Father went in and cleaned it with clorox and it came right off. We are aware that it will have to be fixed when we move in, but if for some reason the appraiser sees some of the mold will he disqualify it? Its really not a huge deal and can be repaired. Need some advice on this and what we can do to improve before appraiser goes out.
Thanks, Kristen
Hi Kristen,
The appraisers do not want to see mold and want it remediated before they will let the property close. I would be careful before you jump in and start cleaning it. Check the EPA website for tips on how to take care of it safely
I just noticed that a response that I made to this weeks ago got stuck in my moderation pool, now apparently I have to approve my own comments! If the appraiser sees mold he may ask for a professional mold remediation company to certify that the house is mold free. You would normally have the opportunity to take care of this before closing. The trick is to be able to get it done within the time frame of the contract.
Can a convicted felon get a fha loan??
Hi Dan,
You seem to have tons of experience, and I found your blog after I googled FHA Home Appraisals. I have a couple of quick questions that maybe you can help me with. My wife and I just had an offer accepted on an REO in Ohio. It is in pretty good condition. The only problems it has are: After I tested all the electrical outlets, one of them in the hallway does not work, but all others work. Also, it has a whole house fan that does not work when you flip the switch (all breakers are on). And, it has an in-wall air conditioner that works, but it is hard wired to an electrical outlet, but the wire is ran across the wall (only about 10-12 inches from the unit, and the unit is about 6-7 feet from the ground). We have an inspector coming out next week, but I would like to know how you would perceive these issues with an FHA appraiser coming the following week as well.
My guess would be (as a real estate agent) that the appraiser is unlikely to test every outlet, but the wire running across the wall and the inoperative whole house fan both might be issues that would come up on the list of required repairs. Typically a wire has to be in a steel or hard grey plastic pipe clamped to the wall if it runs on the outside of the wall.
We are looking at a house and the appraiser went out and appraised a couple weeks ago. He made some comments that the house needed a vapor barrier (which we assumed would come back) also said a light needed to be removed and there was a “slow faucet”. So we installed the vapor barrier, removed the light and fixed the “slow faucet” (mind you the house has been vacant for a couple months because the previous homeowner had passed away) . The appraiser went back out and reinspected for his appraisal and said the faucet was still “slow”.. No other explanations though. The faucet has perfect water flow, in fact you cant get anymore water coming out of it. it even runs faster than the rest in the house it seems to us. So we are not sure what to think.. Can he keep coming back saying that the faucet is slow?? this is the only thing the house is waiting on to close. What should we do and can we report him because both my loan officer, real estate agent and myself all feel he is just trying to get more money out of us…. (he has charged us $675 so far) and im sure he is bound to charge again for another reinspect of the “slow faucet”…. any suggestions on what we can do? this is an FHA loan. Everything about the house is livable and in perfect working condition. The home inspector didnt even say anything about the faucet being “slow”.
Thank you!!!
Brit
Perhaps you could call him and make sure that you are looking at the right faucet, (hot vs cold etc).
It seems like you might be right about the $ issues, but unfortunately he has you over a barrel. I wonder if the inspector went back and put it in writing that the flow was normal, perhaps the underwriter would accept that.
Around here there are rules that the water can’t flow too fast and we have to install “low flow” fixtures on homes built before 1995 to confirm that they conserve water.
Thanks Dan!
I agree we could be looking at the wrong thing however the appraiser isn’t clarifying anything other than a “slow faucet”. The seller is having a plumber go out today so hopefully whatever he finds and writes down will be sufficient for the underwriter and we can get this resolved.
Very interesting that there are such different laws around the country on water flow.
Hi Dan, very frustrated right now with my FIRST home buy through FHA. It’s been 2 months now, everything is set to go, got the appraiser’s report back and he said that the washer sink in the basement has no drain pipe, that when turned on water just flows onto the floor. This is the only little thing keeping us from closing tomorrow. We were planning on removing the washer/dryer appliances anyways. Do we have to place a drain pipe on the washer sink or can we just remove the appliances and cap the water pipe? I don’t how there would be any problem with us removing them completely and not having washer/dryer at all. Please let me know what you think, my bank and realtor don’t seem to have any answers…
Well as I have said many times, because of the fact that I am not an appraiser, my response is basically a guess. I think you would have to remove the washer, dryer and the sink and cap the water lines and drain lines before he would consider it. Why don’t you just ask him? Someone has to know how to get hold of him because he got into the house once.
Also, is there some reason you can’t simply hook up the sink drain? That would be the easiest solution.
I’ve been looking at an apartment that has a rat infestation. Will I be able to use the 203k to fix this problem or would FHA not approve this property at all?
When you say apartment, do you mean a condo for sale, or a multi family building for sale? I would think 203K loans could be used for rat infestation, but it would be up to your lender to make the final decision.
I am in the process of getting an FHA appraisal for a new construction home. It is the second home of four to be completed. Each will have three acres. It has 2222 sq ft. Average sale in this area the past yr has been at least$90 sq ft for comparable sales. How can the appraisal come back at a value just over the sales price of $80 sq ft? Is this common? Area comps show this home should be at minimal $90 sq ft. Have the new regulations forced appraisers to cover their tails so to make the appraisals to represent just over the sales price rather than a homes true value?
Any help would be appreciated.
Thanks,
John
I would appeal the appraisal. If the properties have been steadily declining then the appraiser may feel that the values will continue to go down. If the values have been steady at 90/sq’ I would think you could win an appeal.
Hello, i am trying to buy a home with a 203k loan. The home of course has some issue there is mold in the basement from sitting empty so long and a leak from the shower down there. Would they just do a tear out of the mold or would they want to replace it even though its in the basement. Also if the bank accepted our offer can we go in and do some repairs before the apprasial. Also there is tile in the basement some of its been grouted would they want it grouted?
These are questions for the bank you are getting the loan from. Normally they send a inspector from the bank to review the house and he makes the decision. There are guidelines for FHA 203K loans but the banks are not required to follow them to the letter. The bank can decide to be more stringent than the guidelines. The guidelines spell out the minimum requirements but the bank can be more conservative and ask for more.
I am a 68 year old woman with severe arthritis and can no longer work. I have applied for jobs but no one wants to hire me since there are so many younger people in the workforce looking for work and they are better equipped physically. I purchased a 425 sq. ft. A-frame cabin 8 years ago in a recreational property subdivision on a real estate contract. It had no kitchen and no bathroom and was just one large room with a sleeping loft. Since that time, I have added a full kitchen, bath and dining room (approximately 200 more square feet). I applied for an FHA refinance since I am now retired and wanted to pay off all my debts so I would have just one payment. My only source of income now is social security and I purchased this home and remodeled it so I could afford it when I retired. I just found out that the home was never permitted, my remodeler did not get any permits and installed the septic field and plumbing without a permit. Since I was ignorant of what was required for remodeling, I never thought to inquire if he had permits. I trusted he would do what needed to be done. I thought I was doing what was right by buying a small home and remodeling it so I could live comfortably in my old age. I had an electrician inspect the electric and he said it was in great shape. He did not ask me if it was permitted. I was denied an FHA loan as I had only a wood stove for heat (normal for the rural area I live in) and required me to put in a back up source of heat. That is not cost effective for me at this time since I spent all my savings on remodeling the home. I then applied for a reverse mortgage, but am afraid if they find out the home was never permitted, they will not allow that either. Now I cannot get a mortgage of any kind nor can I sell the home except on a real estate contract which will not give me what I need, a way to pay off all my debts. What can I do to remedy this situation without it costing me more than the house is worth? Thanks.
Well the first thing I would look at is the fact that the FHA loan required a backup heating system. Perhaps that may not be as expensive as you might think. There may be some incentives or programs, depending on where you live that may help you pay for a furnace. In a 425 square foot home some simple electric baseboard heat may be sufficient, and the FHA 203K program may let you finance the cost of the heat along with the rest of the loan. If that was the only reason they turned you down I would start there.
Getting ready to sell my house and have been thinking about the buyers and the likelihood that some of them will be financing with FHA mortgage. I have a one bedroom in-law apartment in the basement, it currently has hotplate and microwave and sink in its kitchen. Are FHA approved homes allowed to have in-law apartment and if so does the in-law apartment kitchen have to have built in stove-top? Thank you for all the great info on this site.
In-law suite means that it is not a legal duplex. So it would actually be not allowed to have a second kitchen in a single family house. I don’t think they would like to see a hotplate because that might make it look like a second kitchen.
Is it leased? If it’s vacant and has inside access to the house, so it could be a part of the main house, I think you will have the least amount of trouble with FHA.
Hello, I am looking to buy a home with FHA financing. It was built long before 1978, so I know peeling paint is looked at by the appraiser. I saw one spot inside which I’ve requested to have scraped and painted. However, outside on the top of the second level, just under the roof, there is a bit of peeling paint. Will that really need to be repaired? Or is it o.k. if it is far out of reach? I would appreciate hearing your best guess. Thank you!
Best guess is that they will ask for it to be repainted any where that it is peeling!
Hello
Can anyone tell me where I can get some help. I just closed on a FHA loan on 01/21/11. My first mortgage payment is due on 03/01/11. I just received a letter last week that my homeowners insurance is cancelling due to the condition of my roof. I had a roofing contractor come out to find out what was going on and too my amazing the roof is in horrible condition. Without even going on to the roof , you can see several shingles missing and you can also see a large amount of wood where the shingle and the step paper is no longer there. I know that I did not get a home inspection, but this is a FHA loan. To my knowledge FHA is suppose to check electrical, air conditioning and heating, plumbing, foundation and roof. Clearly this was not checked. All damage to this roof is visable. On the appraisal the appraiser stated that the roof shingles was average. Which was untrue. The appraiser also made the statement that there is no warranty to the foundation, roof, electrical, slab and air conditiong and heating. I know the appraiser is not an expert and cant give a warranty on these things, but he is suppose to make sure they are working properly at the time of inspection. There has been no inclimate weather that would affect the roof. The condition of the roof today is the same as it was at the time of inspection. Is there anything that I can do? I do not have $6000 to replace a roof when this should have been documented by the appraiser. thanks
Hmm, I am not sure what you can do about this. I would show the paperwork to a local attorney. I think the laws governing this are state laws and would vary according to where you are.
How does an FHA appraiser and inspector look at and consider a house that is not tied to a city water system. Will they approve this? I am currently approved for an FHA loan but I am not sure how the FHA apprasial counts towards a home not tied into the city water cystem.
In general the rule is that if there is sewer in the street the house has to hook up to it and cannot be on septic. I would imagine that this would also apply to the water, but I have never come across that question. As I always like to point out, this info is the opinion of a Realtor, I am not an appraiser.
My fiancee and I are looking to move to Colorado and found a great starter home listed. The home is described as being in good shape except for these issues. The main is that the home needs new septic tank. Then water lines need to be buried below the freeze line and home needs winterizing. So given these issues would the home be eligable for the 203K loan?
I would think that the home would be a candidate for a 203K loan. The thing to understand is the when the inspector from the lender comes out to see if the property they will look at everything and may require that anything else that needs to be done is complete. I always like to point out that I am a Realtor in Atlanta GA not an appriaser, so it’s all just my opinion.
Dan,
Can you clarify if there have been any changes to appraisals for “below grade” and “lower level” rooms in Massachusetts? We have a sloping lot, with a complete 2 story addition at grade level. The 1st floor has a separate entrance and there is no access to the existing basement. In 2005, the lower level square footage was included in the GLA. It is a finished bedroom with heat, picture window, and has 3 fully above grade exterior walls. We are questioning why it is considered “below grade finished basement room” in the 2011 appraisal?
Thanks-M
Michelle, Well I always want to start with the disclaimer that I am a Realtor in Atlanta GA and am not an appraiser. The way it has been treated here over the last couple of years, in my experience, is that if any of the four walls are below grade then it is treated as below grade square footage. In 2005 there were a lot of things that appraisers were doing that are no longer acceptable. Back then the rule was there, but appraisers had more latitude to ignore some of the rules. I don’t think that there was any actual written authority back then to ignore guidelines, but there was much less review of appraisals. You should get some value for the finished lower level but not at the same rate as the main floor per square foot. Your best bet is to look for comps with similar floorplans that support your price, and offer them to the appraiser if they support the value you are looking for.
Dan,
We are in the process of buying and FHA home with a 203K. So the house needs some work. My question is with FHA guidelines does it require a kitchen floor and the counter top is there which is brand new but it is not fasten down will Fha require this also. The shower in one of the bathrooms has mold in it the contractor says we have to replace this, can’t this just be cleaned up to pass. We are redewing the hole house once we close. All we want is the basic stuff done to pass inspection with minimal amount of money used because we are going to tear it all apart. My lender keeps saying that he reccommends using all the money we have available for renovations. Fha does not require paint on the walls do they ? If you could help with these question I would be grateful.
I start every answer the same way. I am not an appraiser, I am a Realtor. My experience is that the FHA has guidelines more than requirements. The various lenders have minimum requirements but they can ask for more if they choose. The contractor wouldn’t be the one to decide what the FHA will approve. The inspector from the lender will be the one who would let you know if the shower needs to be replaced. As I understand it (no guarantees here) if there is money left over you can pay the loan balance down. Generally, in my experience, they haven’t been willing to approve raw sheetrock, they want paint on it, but again it is up to the discretion of the lender and their representative how much you have to do.
Mr. Connolly,
I came across your Q/A pages while trying to prepare for an FHA appraisal to obtain a reverse mortgage. Everything was in place waiting for the appraisal. The man came and we enjoyed a chat after his job was finished (about 30min) during which time I left him to do his job. I felt very positive about the experience after he left. I then received a call from the lender several days later who admitted to being completely confused about the information he had received from the appraiser. He said that he could not find a comparable so he could not do the appraisal. I was stunned of course. I thought an appraiser was trained to appraise property/dwellings and not just copy numbers from a similar property. I would so appreciate your opinion. Thank you.
Mr. Connelly, the appraisal for the completely renovated/upgraded house I am selling (listed for $149k and have contract for $145k) just appraised for $106k. The appraiser is out of the area and is using only foreclosures when there are many others that can be used. Also, he is using houses in other neighborhoods that are not even remotely comparable. What is the process to contest an appraisal? And, someone said that this low-ball appraisal will stay with the property for six months. Is this true? If so, where is that info housed? Thank you in advance.
My husband and I have been pre-approved for an FHA Loan. We have recently found a home that we are interested in, however, after talking to the real estate agent, it turns out that the master bedroom was an addition that was never ‘permitted’. Will this prevent us from putting in an offer and ultimately purchasing this home with an FHA Loan? Thank you for any information.
Jane
I think that is likely not to be approved if the non-permitted addition is disclosed and the disclosure is a part of the contract, but it would be up to the appraiser. There is a chance it would go through but it is not likely. This is my opinion only, you might check with an appraiser that the lender uses and see if an inspection by a structural engineer possibly would affect the decision.
Mr. Connolly,
My husband and I are interested in a home and made an offer for 325,000 it was on the market at 349,900. My main concern is that zillow states the value at 244, ooo. The owner has put in a lot of work new roof, siding , garage doors, but it is an FHA loan that we are gooing with. If the FHA appraisal comes in at less than the agreed price do this still give us the loan for the agreed price.
FHA requires that the home appraise for the sales price. The only way around this would be if you put 3.5% of the appraised value down PLUS the difference between the appraised value and the sales price. (This is not guaranteed it would have to be confirmed by your lender. FHA issues minimum guidelines, it is up to the lender if they go with the minimums or they take a more conservative approach)
Zillow’s values are frequently off. If you are working with an agent you could get him to do a market analysis and see if he can find comparable sales within the last 6 months that support the price.
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