Conventional Loan Appraisal

[snowman20]

We are in the process of obtaining a conventional loan to purchase a home. Can an appraiser make recommendations to the lender that we have repairs made before approving the loand?

The appraiser put things in the report recommending repairs and an inspection. We had a full inspection done prior to the appraisal. She states that an inspection was not provided to her or was she aware of one being done.
First, she never asked if one was done, second, the reciept for the inspection was sitting on the counter in the home when she appraised it.
She is making accusations in the appraisal about a tree in the front yard causing potential foundation damage and that there is sloping in the floor, however, our certified inspection clearly indicates there is no significant sloping of the foundation and that give that the tree has been there for 30+ years and the house has been there for 33 years and there are no signs of foundation damage. She also indicated about a crack in the mortor on a 33 year old chimney.

I understand on an FHA loan that these things would all make since, but this is a conventional with 20% down, why would she make repair recommendations?

Or are there no differences in an FHA vs a Conventional Loan appraisal. When I look her up online it says she is a FHA appraiser, is it possible she did not realize this was a conventional loan?

 

[Lobo Fan]

Let's look at this the other way. What if you get moved in and find there is a foundation crack and the tree has grown into the sewer lines? Or you get sick from the CO2 from the cracked chimney? You would be looking to jam the appraiser if you had a $25,000 bill to fix the foundation.

An appraiser is required to note any observed issues regardless of the type of loan. If you wanted the appraiser to consider your inspection you should have supplied them a copy before they came out.

It is to your benefit to get these issues resolved. I would get a structural engineer out there to determine the extent of any damage.

 

[CANative]

FHA loosened their appraisal requirements in this regard to be more in line with the GSEs ("Conventional.")

If the appraisers notes that there are property conditions that might adversely affect the soundness, livability or structural integrity of the property they are obligated to report these conditions. If a repair is clearly needed the appraiser conditions the appraisal on repair. If there is a condition that "might" cause a problem but the appraiser cannot determine what is needed or if there really is an actual problem they would condition the appraisal on an inspection by a professional with that type of specific experience.

This is not optional and it is not personal.

 

[NorthTexValuation]

The appraiser probably should have discussed some of the items of concern or that an inspection would be required and then you could have shown her the report.

Or you could have proactively provided the inspection report to her.

At this point, simply contact your lender and send the inspection report to them to forward to the appraiser and have her "revise" her "subject to" requirements based on the inspection report.

 

[TRESinc]

the appraiser is there to protect the lender, not the borrower. if you did not inform the appraiser of an inspection done how could they possibly know that one was performed? why would you think an appraiser would look at your personal items, such as a receipt, just because it is sitting on a counter? as amazing as we are we are not clairvoyant and cannot read your mind.

if your inspection was performed by a qualified expert then i would submit the results of that inspection to the lender and then it's their decision to accept the report or not.

 

[Delta85]

If the items noted by the appraiser were important enough in the appraisers opinion that they would effect value this appraiser could either complete the report subject to those items being corrected (which would produce a value as though those problems did not exist) or else the report could be completed as is and those items would effect value. If they are detrimental items they could drive the value way down. Is that what you want? With the value driven far below your contract price the bank would probably back out of the loan.

Don't you want to know the true value of the home? And if the appraiser skipped over the items noted and it effected the home down the road or you failed to keep up with your mortgage would you hold the appraiser responsible in court?

 

[Mike Plumlee]

To fill in some blanks, you state that the receipt for an inspection was on the counter when she did the inspection. A receipt for an inspection tells the appraiser nothing except that one was done - and unless you specifically told her about the receipt how would she be expected to pick up a piece of paper on someone's counter. It's not good policy to randomly pick up papers and read them when you're in someone's home. Unless you specifically gave her the actual inspection document, then she would not be aware that one had been performed. From the way you described it, it sounds like she performed the inspection when no one was home - is that accurate? It's not part of a routine appraisal inspection to ask if a foundation inspection has been performed.

We serve as the eyes for the lender, our client. We have a responsibility to report what we see during an inspection whether it's conventional or FHA, good or bad. The lender, after all, is the one putting up the money based on the asset. It might be possible that the appraiser felt a sloping floor. That's impossible to verify in this thread but what you have here are two differing opinions, an appraiser and an inspector. That obviously needs to reconciled.

When we see or discover uneven flooring, foundation cracks, exterior separations in brick/mortar, etc. we immediately try to see what the cause might be. But, we're not inspectors and it is best if we report what we see and if necessary recommend an inspection to the lender and then let them decide.

 

[Thomas Fiehler]

It is doubtful that she confused the appraisal with an FHA transaction since they require a case #. I've only been appraising 35+ years and you can count on 1 hand, with fingers left over, how many times I have received the home inspection report. The appraiser only reports what he/she sees. The lender may have additional requirements above what the "normal" report should address.

 

[Mike Kennedy]

The Appraiser for a "conventional loan" assignment is obligated to perform a cursory, visual observation of the readily accessible areas of a site and site improvements. Support for an Opinion of Market Value (or other types of Value) is typically requisite photos (if physical site inspection is part of the Scope of Work for an assignment) and commentary including an Opinion of marketability, health & safety issues and the market's reaction to any readily evident physical characteristics of the site "as-improved". The Appraiser then communicates an Opinion to his/her Client (in this case the Lender).

The Home Inspector (may or may not be licensed depending on state and/or local municipal law requirements) performed his/her site inspection based on whatever his/her requirements and communicated his/her Opinion.

Appraisers are not Structural Engineers. Most Home Inspectors are not Structural Engineers. Recommend obtaining an Opinion from one and forwarding that persons' Opinion to the Lender.

 

[snowman20]

Thank you for the feedback. I guess the frustration lies in the fact that this is the 3rd home we have purchased in the last 6 years and have never had this issue. I guess times have changed.
We would have gladly supplied the inspection report had we known this was something she needed.
We did supply the inspection to the lender and hoping that will help clear some of this up.
There are no visiible signs of damage from the tree being in close proximity to the home, no cracking of the sheetrock, brick or foundation on the outside or under the newly installed flooring.
Now if we could just get the lender to respond so we can finish this up and close.
Again, thanks for all the input, it does help us understand what is happening a little better.