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FHA Final Inspection, But, had no FHA issues, subject to driveway and A/C

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PBKlingensmith

Sophomore Member
Joined
Feb 15, 2008
Professional Status
Certified Residential Appraiser
State
Pennsylvania
I completed and FHA appraisal a while back, there were no FHA issues with the home. But, I did the report subject to the gravel driveway being paved and central air being installed as these were items within the sales contract. I completed a final to ensure those items were installed, so which for do I report it on? 442, 1004d, or FHA compliance?
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
I completed and FHA appraisal a while back, there were no FHA issues with the home. But, I did the report subject to the gravel driveway being paved and central air being installed as these were items within the sales contract. I completed a final to ensure those items were installed, so which for do I report it on? 442, 1004d, or FHA compliance?

You use the CIR for FHA assignments. But those items are not FHA MPR's and I probably would not have conditioned the appraisal on them. It's not our job to enforce contracts.
 

Greg Bell

Senior Member
Joined
Jul 7, 2006
Professional Status
Gvmt Agency, FNMA, HUD, VA etc.
State
Louisiana
Cosmetic would be a 442.Only use FHA compliance for an FHA subject to repair.Items are considered cosmetic that are not MPR items..
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
I had one with major cracks in the concrete driveway. I did not require it to be repaired but I did include photos of the driveway. In a couple weeks the lender requested that I do a final on the driveway. I did it on the 1004D. Lender came back and wanted it on a CIR. I did it, the deal closed and I was paid. (appraisal fee PLUS the CIR)
 

Riick

Elite Member
Joined
Aug 14, 2007
Professional Status
Certified Residential Appraiser
State
Delaware
?????
Choices available on FNMA 1004 are:
  • "as is,"
  • subject to completion per plans and specifications on the basis of a hypothetical condition that the improvements have been completed,
  • subject to the following repairs or alterations on the basis of a hypothetical condition that the repairs or alterations have been completed, or
  • subject to the following required inspection based on the extraordinary assumption that the condition or deficiency does not require alteration or repair:
Since I am admittedly new to FHA insured loans, would someone clarify for me why the OP should not have required completion of the work specified in the contract?

In my mind, that work ["...gravel driveway being paved and central air being installed..."] would have an affect on the property's market value.
 

PBKlingensmith

Sophomore Member
Joined
Feb 15, 2008
Professional Status
Certified Residential Appraiser
State
Pennsylvania
Greg,

I did not condition the appraisal, FHA wise, for the items to be completed. But, the report was done subject to those items being finished. In this case, those items in the contract do affect the properties market value and their completion was necessary. Thereotically, how would you complete a new construction FHA appraisal without recognizing the contract?
 

CANative

Elite Member
Joined
Jun 18, 2003
Professional Status
Retired Appraiser
State
California
Are concrete driveways and air conditioning required by local custom or codes?
 

Marcia Langley

Senior Member
Joined
Aug 26, 2005
Professional Status
Certified Residential Appraiser
State
Missouri
For additions and improvements that are not otherwise required as minimum property standards, it's the client's choice whether the opinion of value should be subject to their completion, or not.

If the assignment is to opine a value as if they were complete, it would be handled with check box two, the same as if the house were new construction.

In my experience, most lenders request the "as if complete" value on anything that is real-estate-value-affecting in the purchase agreement. But they would not have to, it's their choice.

This would be true whether it was an FHA job or not. The completion form used would depend on the assignment. Of course the 1004d would be used on a GSE compliant assignment.

The FHA form would likely be the FHA Compliance Inspection Report. If the entire house were new construction, the appraiser would not be the one assigned to fulfill that inspection.

I really don't know about smaller items being added to an otherwise existing house. The form can clearly be used but the "final inspection" language may put too much burden on the appraiser for claiming it is adequately built. That language seems designed for the building inspectors that FHA uses on new construction.

Really, I think the client should be using that new construction inspector for this.
 

PBKlingensmith

Sophomore Member
Joined
Feb 15, 2008
Professional Status
Certified Residential Appraiser
State
Pennsylvania
I just put it on the CIR form and stated the reason for the inspection. Everyone is happy. As per the local custom question, deed covenants are involved within the plan and the asphalt driveway is required. I had 5 comps on the report, all had central air, so local custom shows its required. Funny thing. I contacted HUD directly, I received their form letter back...stating use the FNMA forms blah blah.. Then their question. Did we answer your question? I had to reply, well no, you did not even address the question that I asked of you..
 
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