The appraisal of a home is an important step in the real estate process, one that can certainly make or break a deal. An appraisal is a valuation of a property done by a professional, licensed individual who prepares a comprehensive report for a client, which is an opinion of the value at that specific point in time.

If the loan being sought is a conventional loan, the appraiser’s report will be a straightforward opinion on value, usually with no comments on the condition of the property. But, when the loan being sought is a low-money down loan such as FHA, USDA, or VA loan, then there is an added layer of scrutiny in addition to value.

When a low-money down loan is being used, the appraiser has two objectives. The appraiser is required to determine the current market value, but they also require a property inspection to make sure the home meets minimum standards for health and safety. This "double duty" role of the appraiser includes checking for health and safety aspects of a property. Here is a checklist provided by FHA of the key inspection areas required by the Department of Housing and Urban Development (HUD):

 

• The lot should be graded in a way that prevents moisture from entering the basement and/or foundation.
• All bedrooms should have egress to the exterior, for reasons of fire safety. A bedroom window will suffice, as long as it's large enough to allow egress.
• Many homes built before 1978 still contain lead-based paint, which is a potential health hazard. In these homes, the appraiser will check for damaged paint (peeling, chipping, etc.). Such conditions must be corrected before the loan will go through.
• All steps and stairways must have a handrail for safety. This is a commonly cited discrepancy during FHA appraisals.
• The heating system must be sufficient to create "healthful and comfortable living conditions" inside the home.
• The roof should be in a good state of repair and must keep moisture from entering the home. It should "provide reasonable future utility, durability and economy of maintenance."
• The foundation should be in good repair and able to withstand "all normal loads imposed" on it.

 

 

 

 

Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin, MD.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.