January 25, 2017
A reader asked a question about the FHA appraisal process in our comments section recently; “I am currently selling my house. The buyer is getting a FHA loan.”
“The appraiser asked us to repair any broken brick on the outside of the house. My husband scraped off the parts of the bricks falling apart and filled each hole with mortar and painted it as close to the brick as he could. Will this be an acceptable fix according to the appraiser?”
When an FHA appraiser requires corrections as a condition of loan approval, borrowers will likely have to pay for an additional compliance inspection, which allows the appraiser to verify that the corrections were made to the satisfaction of FHA minimum standards.
Whether or not a certain correction or repair passes is left up to the judgment of the appraiser, so it’s impossible to determine whether or not the appraiser will approve such corrections, especially sight unseen.
It’s also very important to remember that state or local building codes also have a say in such cases; if the compliance inspection determines that the corrections or repairs are not up to code, the borrower may be back to square one (though how often that actually happens is unknown).
The basic answer to this reader question about FHA appraisals is that it depends on the appraiser and applicable building code.
While we’re on the subject, borrowers should remember that an FHA appraisal is not a home inspection, is not intended to be used as a home inspection, and insures ONLY that properties meet FHA minimum standards. An FHA appraisal cannot and should not be taken as stamp of approval on a home, or a guarantee that the home is free of problems.
Only the more in-depth home inspection (which is optional but an additional expense for the borrower separate from the appraisal fee) can give a more complete picture of the home’s condition. Bottom line? If you purchase a home without paying for the optional home inspection, you are not making a fully informed purchase.
Furthermore, the FHA has no recourse for borrowers who purchase the home on the strength of the appraisal alone and without a home inspection.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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