FHA Appraisals vs. Conventional Appraisals

What makes FHA appraisals different than conventional?
FHA loans have become popular again so it is important to understand the increased scrutiny in the FHA appraisal process compared to convention loans.

FHA appraisals are good for three months and stay with the house regardless of the Lender or the borrower. There is no "retyping" necessary for an FHA appraisal.The appraiser must be on the FHA roster and an FHA case number must be issued BEFORE the appraisal can be scheduled.

One of the major differences between a regular inspection and an FHA inspection is that a property inspection will involve and in-depth visual inspection of all areas of the subject property, including the attic. It is always advisable for the lender to inform the homeowner of this requirement. The appraiser must inspect the attic, even if access is available only through a scuttle.

Another major difference from a conventional loan appraisal is that for an FHA appraisal, the appraiser must report any deficiencies noted during the inspection. Required FHA repairs (deficiencies) are those that impact the safety of the occupants, the security of the property or the soundness of the structure. In cases where such items are identified, it is the appraiser's responsibility to make the value opinion of the property "subject to" the repair of the item. Such appraisals that mandate a repair item will then require a compliance inspection to ensure the deficiency has been corrected.

While potential repairs do cause a delay to the transaction, they are essential in order to eliminate conditions that threaten the physical security of the property. FHA appraisals, however, are no guarantee that the property is free from defects; the appraisal only establishes the value of the property for mortgage insurance purposes. In fact, buyers are generally encouraged to engage a qualified home inspector to obtain a more detailed physical (rather than visual) property inspection.

A general list of additional checks for an FHA appraisal are:

***Identify any chipping, peeling or cracked lead-based paint - interior and exterior
***Verify there are no issues with water damage or drainage
***Insure proper ingress and egress (18") from all buildings to the lot line.
***Test for a properly working heater and, if present, air conditioner
***Test for adequate water pressure and no water leaks
***Validate every bedroom has exterior access
***Test for a working oven hood/fan (carbon monoxide danger)
***Verify a minimum 60 amp electric box
***Test for working electric outlets in every room
***Identify any exposed wiring or missing electric box cover plates
***Verify roof vents are screened and a maximum of three layers of roofing material
***Complete a head and shoulder inspection of attic and crawl space

Thanks to Platte Valley Bank for providing this useful information today!