Wow,
Appraising for the FHA for an "after improved" value estimate is sometimes a challenge. There are appraisers however that just don't understand. To help make it clearer I offer this example.
We just had one in which these is a "mold like substance" on the walls of a bedroom and closet, likely caused by the lack of insulation in the walls and a lack of ventilation in the room.. the bed may have been too close to the wall for years.
In any case the 203k consultant report indicates that this discolored area will be cleaned with a fungicide like bleach, and then sealed with "Kilzit" sealer with fungicide in it. Once all that is done the walls will be painted with a good quality interior latex paint.
The problem for the appraiser -
1) if this appraisal is done "as is" then the mold like material is clearly going to show up in their report. No question.
2) If the appraiser's instructions were to appraise the property "subject to the repairs" which is an "after improved" value. Then there is no mention of the mold, it won't be there, it has been removed, sealed and repainted.
We just had one in which the appraiser wants a "mold expert" to determine what kind of mold it is, and what it will take to remediate the problem causing a delay in closing the loan and needless expense for the client. Imagine if the appraiser showed up after the work had been completed, there would be no mold like substance visible and no comment would have been made to hold up the closing.
Appraisers need to "look at the assignment" and appraise the property as the assignment suggests and this can be avoided. Lenders ordering the appraisal should be specific as to how the assignment reads as well. You can't just say "appraise this for a 203k" as that leaves too much open to interpretation. Speciify the appraisal is to be completed for an "after improved" value
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