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FHA Guidelines for roof repairs

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thedavesta

Thread Starter
Sophomore Member
Joined
Jul 29, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Hello everybody.. I performed an inspection on an REO yesterday and found the property to be in overall average shape, on the inside nothing needed repairs however on the exterior there was evidence that a blue tarp had just been removed and the tile roof was missing a good portion of its tile. The buyer has explained to me that she will completely replace the new roof on the property as soon as she closes ....BUT this order was sent to me as an FHA... My question is do I make the report "subject to roof inspection and repairs" or do I make it "as-is" and give it an adjustment for its cost to cure (approx 25K). The property is a nice neighborhood in Coral Springs, FL where the median home sells in the $260k range and recent comps are as high as $325k. Contract price is $188k with a pool.. Thanks for your insight..
 

Mr Rex

Elite Member
Joined
Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
Subject to.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
FHA requires a servicable roof. Period, end of story. And you should know that already or you should not be accepting FHA intended use assignments. The fact the buyer has good intentions after closing is completely beside the requirements. What the median sale prices, what the comps are selling for, what the contract price is, are all also completely beside the point regarding the requirements for an FHA assignment regarding a failing structural component such as a roof. This is not a "there is plenty of equity there" situation that can be used to justify the appraiser not calling for repairs the appraiser is duty bound to be calling for. The parties involved are going to have to rearrange their plans to meet the type of requirements for the loan the buyer is wanting to use. Not play games attempting to sidestep those requirements. Or you can decide to risk getting blacklisted by FHA if you so opt to do so. Your choice. Suck up to this client or suck up to FHA requirements. I recommend a good long term business plan would be the later of the two choices.

As a side comment to other readers and forum posters. Why original posters keep starting out saying they have an REO, when the reality of the assignment is they have a sale transaction going on with an intended use of an FHA backed loan, is beyond me. The fact the current seller happens to be an entity that has foreclosed recently does not alter the fact that the inspection was not for an REO portfolio assessment or preforeclosure assignment. The assignment, and inspection, was for an FHA loan based sales transaction for the intended use. Not an REO intended use.

P.S. How do you intend to "cost to cure" for FHA / HUD all the water damage that is going to happen to that house if that roof is not made to be servicable? Call for a roofing inspection, use CB4, value as if roof is servicable under the included EA. Or if you know for a fact the roof is not, cuz you are an expert on roofing or see all sorts of water damage, use CB3 and require repair or replacement. Again, under a HC the work has been done, value as if done. The buyer's lender must get that roof cleared. The seller, regardless of being some REO owner (bank?) may have to suck it up and repair the roof if they want to obtain a buyer using a FHA backed loan.
 
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Richard Carlsen

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Michigan
Based on FHA requirements, with missing tiles or even missing, cupped or damaged shingles or, any indication of any leaking, make the report subject to an inspection.

What I do, if there appears to some aged or worn shingles (we really don't use roof tiles in the north) but no evidence of any leaking, I note the condition of the shingles in the report (with a photo if it shows anything) with a comment about no evidence of leaking noted and recommend that the client consider ordering a roof inspection by a licensed/qualified contractor for a detail report of the roof condition. No "subject to" conditioning of the report in this method while putting the roof inspection requirement decision square on the UW. This is what I did the other day on a 100+ year old house with some worn shingles and evidence of what appeared to be some old water staining to the roofing boards (original boards) in the attic that could be anywhere from 2 to 85 years old. It was on the south exposure and could be the results of roof design (4 Square house) and an ice dam which is common on the south side of taller, older houses. I could not determine the age/cause and am not qualified to do so. I let the UW decide what course to follow. (SEP)
 

Mountain Man

Elite Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
Georgia
Subject to. A damaged roof is not just cosmetic... it's necessary for safe, sanitary, and secure living.
 

thedavesta

Thread Starter
Sophomore Member
Joined
Jul 29, 2008
Professional Status
Certified Residential Appraiser
State
Florida
Thanks for all your insight, I have noted the damage on the roof on the report and made the report requiring a replacement as it is beyond question that it needs to be replaced (no other way around it) and I have always disclosed everything on the report cosmetic or not. My secondary question is then value it as if there's a new roof ? No adjustment necessary ?
 
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