I recently did an inspection for an appraisal on an FHA refinance loan. It was an older home that had been undergoing some updates and renovations. One of the biggest problems I see on older homes, and one which this home had, is peeling and chipping paint. This is not an issue with conventional loans (unless it is a specific investor requirement), however it can be a deal breaker with FHA loans. If it doesn’t kill the deal it can at least delay the closing.
Peeling and chipping paint is a health risk and falls under the “Safety, Security, and Soundness” realm, which is why it is an FHA requirement for this condition to be corrected. According to the U.S. Department of Housing and Urban Department (HUD) the general requirements are as follows:
“For all properties built before January 1, 1978, the appraiser must inspect ALL interior and exterior surfaces, such as walls, stairs, deck, porch, railing, eaves, windows, doors, fences, detached garages and other outbuildings and appurtenant structures for defective paint surfaces (i.e. chipping, peeling or flaking paint) and report defective conditions in the appraisal report.”
The appraisal would have to be done “subject to” the peeling paint being corrected. It is important to know why the January 1, 1978 date is crucial. Prior to this time paint was made with lead in it; and lead is toxic if it is ingested. Because of this it must be removed per FHA guidelines. To find out the exact procedure to use you can go to the HUD website at HUD.gov, but the short version is this: The paint must be properly removed from the surface AND totally cleaned up with no signs of it left on the ground. The bare surface must then be repainted with a non lead based paint. If this can be done before the appraisal inspection, it can save a lot of time and cost since the appraiser will not have to go back to the property to verify it has been done. You can save yourself from a big headache by doing a little bit of pre appraisal inspection homework.
Mr. Horn provides real estate appraisal services in the Birmingham, Alabama metro area where he concentrates on residential properties, which includes single family homes, 2-4 family homes, lake homes, condos, vacant land, and manufactured homes. You can learn more about him by visiting his website at www.Appraisal-source.com, or his blog at www.BirminghamAppraisalBlog.com.
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