S2 Ep36 - Appraisal Inspection Conditions - a podcast by Brian Cook And Kindra Cox

On Season 2 Episode 36 of The Brian & Kindra Show, they discuss condition standards for real estate appraisals. 

For government secured loans, such as USDA, VA, and FHA, and occasionally even for conventional loans, the appraiser conducts an inspection of sorts at the time of appraisal. This inspection is not the same as a general inspection; the goal of the appraisal inspection is to ensure that the home is “safe, secure, and sanitary.” Using that guideline, some issues can be very obvious, but, in reality, some issues are not. 

Repairs that are listed as “appraisal required repairs” are not optional; if the repairs are not completed, the buyer cannot secure the financing to purchase the home. Since the bank is loaning a very high loan to value amount on the home, secured by a government program, they want to ensure that the home is in good, serviceable condition at the time of purchase to help prevent the possibility of quick deterioration or of issues that would cause a person/family to abandon the home. Deterioration would lower the home’s value and therefore the bank’s ability to recoup its funds in the event of the buyer defaulting, and a major issue that made the buyer simply abandon the home would put the loan in default; both are scenarios that the bank would like very much to avoid. 

Exterior issues are particularly prevalent. Repainting where paint is cracked & peeling is an appraisal required repair that is seen quite often. This is seen often on siding, particularly “masonite” siding and wood trim. These also have to be free of rot and excessive splits. 

Other items that Brian & Kindra have commonly seen that require repairs include: smoke detectors must be present & functional; flooring cannot be heavily worn, damaged, or stained; GFCI (ground fault circuit interrupter) outlets are required for any outlets within 6 feet of water and for garages & exteriors; hot water heaters must be raised if they are natural gas and located in the garage; hot water heaters must have proper venting; and hot water heaters must have a properly installed pressure relief valve and outlet. Your real estate professional should be able to point out some repair issues that may come up during an appraisal so you can get a jump-start on repairs, but the final opinion that matters is that of the appraiser, so simply be prepared that some items may need repaired, and look to your agent to help facilitate those repairs!

To listen to the full episode of The Brian & Kindra Show, search for them on your favorite podcast service or check out the video on YouTube by searching “The Brian and Kindra Show”. 

Brian and Kindra hope this information has been helpful to you. As always, if you have any questions or need help, please feel free to reach out to your local real estate professional.

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