Keller Williams Realty
Information For Sellers And Buyers Using FHA As Financing
|The Pamela Madore Group|
Today I was privileged to attend a class presented by a local FHA appraiser. As a Realtor, seller or buyer there are things that go on behind the scenes that we aren't even aware of. And often times they affect us.
The usual response is to get all mad at the appraiser, etc. Well I think after hearing what they have to go through, we should cut them a little slack. Here are some things that you may or may not know.
In the past it has always been that if the house was built before 1978 there could be no chipped and peeling paint anywhere inside or outside of the house. They could extend to outside structures and fencing. The rules have now changed so this applies to ALL houses no matter how old they are.
|Chipped and Peeling Paint|
Additionally, if the house was built before 1978 and it is owner occupied, the owner can do the repairs themselves and certify that it was done. However, I had a transaction not too long ago that the seller repaired the chipped and peeling paint and the FHA underwriter required a receipt from a certified painter. Well, we didn't have one so what we ended up doing was to have an FHA appraiser come and check and give us a report.
Another detail is that there can be NOT ONE scrid of paint on the ground. Not one. A few choices are to lay down drop clothes, get a shop vac or my personal favorite is to cover the area with mulch. (That is probably not allowed).
New subject. Appliances. The appraiser must check to be sure that all appliances work. That includes the stove, refrigerator, microwave, dishwasher, compactor, and garage disposal. If you happen to have a wet bar or such the frig there needs to be working, too. If it has central heat and air, that, too, must be working.
|Appliances Must Work|
Let's look at potential problems. The buyer has always done the inspections before the appraisal has been ordered. There may have been some negotiating back and forth and let's just say, for instance, that the house was vacant and the stove didn't work. In the negotiation, the buyer said that is OK because they had their own. The appraiser goes out and it isn't working. Oops seller. Fix the stove.
How about the new National Data Base? When an appraiser does an appraisal they are required to upload the appraisal into the National Data Base. The National Data Base then plugs it in and compares to other appraisals or sales done in the area. If the National Data Base people don't agree, they send it back to the appraiser for comments, etc. In other words, he has to justify what he did. f for some reason the National Data Base comes back and doesn't accept the value the appraiser put on it, they say nope, it is only worth this much.
The appraiser then gets to decide what to do. It can be very likely a lose-lose for the appraiser, Let's say the National Data Bases came in $5000 less than the agreed upon sales price. If the appraiser chooses to use the NDB (sick of typing the whole thing out) value, he is going to have Realtors and sellers mad as wet hens. The buyer may also be in jeopardy because maybe the seller can't reduce the price $5000.
Next scenario. The appraiser chooses to ignore the NDB value, which he has the right to do, and then Realtor, seller and buyer are all happy. And then it goes to the FHA underwriter who sees that the NDB said one thing and the appraiser said something else. Now the underwriter has to decide which number to use, remembering that the underwriter has a boss, too. So let's say the underwriter chooses the NDB number. Now who is mad? Just plain everyone.
I am never going to be an appraiser.
What about added value of amenities? How about that $50,000 pool with spa and all the bells and whistles available you put in last year. Will it add $50,000 value to your house. I am shaking my head no. Those types of things, depending on location, age, comparable properties MAY increase the value of your property by $25,000. Hopefully you built it for enjoyment and not to increase the value of your property.
I will end with some easy ones.
- smoke detectors---yes
- carbon monoxide detectors--yes
- holes in the walls--fix
- one window in each room must open--yes
- GFIs required--no
- must a hot water heater be enclosed--no
- must a hot water heater have a pressure release value going outside--yes
- must a hot water heater have a pan under it--probably
- must attics have access--yes
|Must Have Stairs|