A Little Preparation Can Make the FHA Appraisal Process Go Much Smoother
How to make your home ready for an FHA Appraisal
FHA is great program that allows home buyers who have less than perfect credit to purchase a home with just a 3.5% down payment. The one thing that often scares potential buyers or sellers about FHA is the appraisal process. It is true that FHA has stricter guidelines on property condition than some other mortgage programs but these “strict” guidelines are often easier to meet than many people realize. A lot of the concerns of whether a home will pass an FHA inspection is due to not knowing exactly what an FHA will flag for repair. Preparing a home prior to listing it on the market is a great way for sellers to make their home available to more potential buyers. Sometimes a little preparation makes all the difference. Let’s review this basic Preparation Checklist…
Prepare the Property
Make sure that all utilities are on and are fully functional and operational. During the winter, vacant homes are often winterized with the water turned off. If the water has been turned off, make sure it is turned back on prior to the appraisal inspection. The FHA appraiser will not turn on the main water. The appraiser does not want to be responsible if there is any plumbing damage that occurs when the water is turned back on. The main water needs to be turned on as part of the inspection.
The appraiser will need to access the attic and/or crawl space. The appraiser will need to view and photograph this area.
All rooms must be fully accessible. The appraiser will not move any items to gain access to any room.
Any outbuilding (garage, shed, barn, etc) must also be accessible.
Provide permits for any recent structural improvement.
If the property has a Well and/or Septic system, the appraiser will need to determine their location. FHA guidelines dictate that there must be sufficient distance between drinking water and waste water
Common Property Repairs for FHA Mortgages
Plumbing Leaks – The appraiser will check the faucets, run the water and look for any leaks. Water damage marks on ceilings may get flagged for further inspection to make sure they are not caused by an ongoing leak.
Broken or cracked windows
Fully operational doors and window
Exposed or damaged electrical wires
All rooms must have adequate heating
Any interior or exterior stairs often require a handrail (appraiser discretion)
Homes older than 1978 may have lead paint. Any chipped or peeling paint requires repair (scraping, repainting, proper disposal of any paint chips).
Exterior wood must be stained or painted
Ground Fault Circuit Interrupter (GFCI) outlets must be present on any electrical outlet within 6 feet of a water source
It is more time efficient and cost efficient to tackle any of these repairs prior to a visit from the FHA appraiser. When a house is flagged for repairs, the appraiser will need to re-visit the property to make sure the repair work has been completed prior to closing. If you are on a tight closing deadline then this additional re-inspection could make it difficult to meet your closing date. In addition, these re-inspections often cost between $100 and $200.
Remember if you are buying a home that ends up needing FHA required repairs, the FHA has a program that allows you to have these repairs completed after closing. This program is known as the FHA 203K Renovation Program. This FHA 203K program sets aside funds to make repairs and improvements when buying or selling a home.FHA required repairs can be included with this program.