What you need to know about the FHA home appraisal

Jennifer Hutchinson
Published on May 4, 2017

What you need to know about the FHA home appraisal

It’s safe to say anyone who was in the market to buy a home last year knows that 2016 was a hot and heavy sellers’ market across the country. We saw far more buyers than homes on the market to satiate the demand. And, while the conventional loan still remained the most popular among these homebuyers, the FHA-backed loan accounted for 17.5 percent of all purchase and refinance loans at this time last year.

As a testament to the program’s popularity, Q1 home loan originations last year decreased 8 percent over 2015’s level yet FHA’s loan share increased 7 percent — the fifth consecutive quarter with an increase.

Since so many homebuyers are using the FHA-backed loan, and there are many aspects of the program that differ from a conventional loan, today we’d like to clear up the confusion surrounding the FHA appraisal.

 

What is an appraisal?

Quite simply, an appraisal is an evaluation of a home’s current market value. Yes, real estate agents determine this value for their listing clients and use many of the same methods that a professional appraiser uses, but the home appraisal demanded by the lender uses an appraiser of its choosing and this person has the final say (usually) on how much a home is worth.

Lenders naturally want to ensure that the home they are lending money on is worth at least what the buyer is paying for it. To determine its worth, the appraiser will visit the home, taking a look at the structure, roofing, foundation, lot size, location within the neighborhood and more.

He or she will consider the home’s interior as well, verifying the square footage (which is actually determined by the exterior measurements of the home), making note of any improvements. Back at the office, the appraiser will research recent real estate activity in the neighborhood, comparing the home to those which have sold, to come up with the value of the home.

About FHA appraisals

Just as the lender wants to ensure the home is worth the money its lending, FHA wants to make sure the house is worth the amount it’s insuring. But, the FHA appraisal goes a step further – ensuring that the home meets HUD’s minimum health and safety standards.

Therefore, all homes purchased with an FHA-backed loan must be appraised by a HUD-approved home appraiser and certain property requirements must be met for the FHA to finally ok the purchase.

As mentioned above, most of these have to do with the “safety and well-being of the occupants,” according to FHA. These requirements include:

  • All stairways must have handrails
  • All bedrooms must have at least one closet
  • There must be “access/egress” from each bedroom to the outside of the home
  • The FHA inspector must find no structural problems, such as damage to the foundation or roof
  • The appraiser will check the lot’s grading to ensure that it slopes away from the home to prevent water intrusion into the foundation or basement
  • If the home was built before 1978 and the appraiser suspects it contains lead-based paint, he or she will look for chipped and peeling paint.
  • The heating system must be in good working condition

FHA Appraisal Guidelines

Now, if any of these requirements aren’t met, the appraiser will mark them as “subject to repair,” which means that the seller will need to repair the problems before FHA will insure the loan.

If the FHA appraiser determines that the home isn’t worth what the buyer has agreed to pay for it, negotiations on price re-open and there are a number of ways to approach them. If the seller doesn’t agree to fix the problems, on the other hand, the sale will not go through. Thankfully, unless the required repairs are prohibitively costly (such as adding doors or windows to provide egress to the home’s exterior), most sellers understand their obligation to make them so the deal can go through.

Powered by WPeMatico

Thinking of selling your home? We can help!! Core Property Consultants has a group of licensed Realtors whose passion and daily drive is to get your home sold.  We love being a part of seeing clients achieve their goals. Core Property Consultants understands marketing is key, therefore we hit it from all angles.  We combine our knowledge with “out of the box” marketing techniques and latest technology when showcasing our home listings.  

 

Need Seller Info?  Read Our Seller Guide Click Here

 

Want to know how much your home is worth? Click Here

 

Connect with Us on Facebook!! Click Here

Looking for a home?  Let Core Property Consultants help you!  Core Property Consultants have a team of licensed Realtors that will assist you through the entire process.  We understand life’s demands and how busy you can be from day to day.  Our goal is for you to only worry about when it is time to call the movers. Core Property Consultants covers the entire Southeast of the state of Louisiana.  You can find us from the Mississippi state line down to the Gulf of Mexico.  Cities we cover are Baton Rouge, Livingston, Hammond, New Orleans and all cities/towns in between.

Need Buyer Info?  Download our Buyer Click Here

Buying a home? Search all available home listings… Click Here

Need Information about a particular city? Click Here

 

Connect with Us on Facebook!! Click Here

 

Relax. Reset. Re-Imagine. No Repeats.  Real Estate Done Differently.

Core Property Consultants was founded by Jennifer Hutchinson, Broker. The company specializes in Residential, Commercial, and Land. The directors chose to have three divisions within the company as  Realtors have more experience and knowledge in one area versus little knowledge in all areas.  Each Realtor was carefully chosen by the directors of the company to serve in their field as top notch, stellar Real Estate Consultants.

What you need to know about the FHA home appraisal
Please use a valid email.
Please use a valid phone.
Please fill in all fields.
view now