• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

FHA & Home Inspections

Status
Not open for further replies.

Ramona

Sophomore Member
Joined
Feb 3, 2002
Professional Status
Licensed Appraiser
State
Maryland
How do you handle an FHA appraisal when given a copy of the home inspection, and items that an appraiser would not normally inspect are listed on HI report (TPR valve overflow blockage on water heater, etc)? I am concerned about crossing the line between the scope of the appraisal (and what I am qualified to ascertain) and what a home inspector does, but on the other hand, if we are given this data, and therefore the knowledge of the issue, should we VC it? From an appraiser FHA testing standpoint, the water gets hot when turned on, furnace and CAC functioned, outlets functioned, etc. I know we have appraisers with electrical/HVAC/plumbing backgrounds, and at least 1 appraiser/home inspector on the forum, do you guys limit your inspections to FHA regulations, or inspect systems more thoroughly with your more extensive construction experience?
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
If I'm handed a home inspection report prior to my finishing the report, I will use the information found there and VC for items in the home inspection. Same as I would for any other information I've been given prior to the completion of the report no matter who it's for. If it's an item I didn't/could't actually see but is listed on the home inspection report, I will state

Per Home Inpsection Report dated XX/XX/XXXX:

Then list the items.

As appraisers, we collect all the data we can get, analyze it, and report. Always cover yourself with who/where/when etc and a lot of "It appears..." and "Per ......" and "Subject to current survey" and "Subject to current Title Search", etc. For FHA, I like to add "DEU can/may order additional inspections and/or repairs." and "Estimated repair costs are subject to professional contractors and/or inspectors reports and estimates."
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Ramona:

I don't accept or review reports from home or pest inspectors to prevent myself from being in the position your in now. I'm paid to do my own inspection per HUD guidelines. Once you cross the line of reporting what someone else identifies as a problem, you're asking for problems. What if that other person is wrong?
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
larryH et al ~

You might want to read 4150.2, pg 5-3, bottom paragraph which actual reference is Section 5-1B, last paragraph, last sentence:

"... If available in a timely manner, home inspection reports should be sent to the appraiser; this affords the appraiser the opportunity to make valuation adjustments as needed."

Of course, it doesn't say for certain that the appraiser ought to be VC-ing for anything contained in the report. But a hazard like a plugged overflow valve on a hot water heater is distinct hazard to the safety of the occupants. And, it's quite inexpensive to repair -- I'd guess $85 for the valve and another $125 for the gal who does it.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Originally posted by Larry Lyke@Jul 20 2003, 07:57 PM
$85 for the valve and another $125 for the gal who does it.
LL::wub:

I quite agree that any 'closer inspection' items by a "trained specialist" :rolleyes: ought to be referenced and accounted for, especially on a FHA.

The fact that it might be something I did not observe is beside the point, if it appears reasonable. I DID once catch one where the inspector 'mixed up houses' and asked "What in the world he was talking about"?!?!? :lol:

I prefer to have an inspection report if one is available on a conventional loan also, just so I can say items were considered in value, OR on rare occasion, not apparent and NOT considered :blink: and condition a report based on the final outcome of some inspection called for by the home inspector! ... We are assessing market reaction to the house in the value section! Not our personal 'this thing has a functionally nightmare floorplan, and ugly colors and the previous and prospective HO's and realtors are idiots' problem! :rolleyes: .

If you at least address the issues, it beats the hysterical screaming last minute "You gotta address this NOW" phone call, about the termite damage in the south corner of the crawl space 30 minutes before closing... ;)
 

Larry Lyke

Senior Member
Joined
Feb 2, 2002
Lee Ann et al ~

More especially regarding the plugged overflow valve on the water heater is the fact that 95% of us appraisers would not or could not observe this malfunctioning valve.

It's kind of an esoteric issue.

BUT once alerted to it, it ought to be VC'd -- ALSO, because it's a clean-cut issue to deal with (read remedy) -- like you say, without all the screaming and hollering.

The sellers or occupants just cough up the $210 and the issue goes away very neatly.
 

Don Clark

Elite Member
Joined
Jan 17, 2002
Professional Status
Certified Residential Appraiser
State
Virginia
B) LarryH,

Not picking on you, but............to ignore or refuse any data to me would be very foolhardy. Lary L has it right, and his 4150.2 referrence is very appropriate. I used the comments in a home inspection just last friday to require repairs on a VA appraisal I was doing. I could not have seen the problem described but it fit into what I could see, and if not corrected would have caused further deterioration of the subject. Avoiding knowledge about something will not make you less liable, and if known that you rejected that knowledge, may make you more liable.

Don
 

Rich Hahn

Senior Member
Joined
May 2, 2003
Professional Status
General Public
State
Colorado
I just bought a pressure relief valve(the water here is really chetty and they last about a year) $5.95..ok so I bought 2. Off the shelf at Lowes or Homedepot(they look the same to me)
10 minutes to install

now I can sleep better at night

As cheap as they are FHA should just install a new one on each purchase...just a thought.
 

larryhaskell

Senior Member
Joined
Apr 23, 2002
Professional Status
Certified General Appraiser
State
Nevada
Don:

Don't worry about picking on me if that's what you thought you were doing because I didn't take it that way. I base my decision on how I handle this from when this whole home inspection/VC sheet began several years ago. I use to look at the HI reports and even requested that some of the items be repaired. As you can guess, the poop hit the fan. I have discussed this issue with different folks @ the HOC and every time I'm told to do my own inspection because wants two sets of eyes looking @ the property not just appraisers reviewing the HI report. To address your point about not reporting something on the HI report. First of all, because HIs are not required, about 50% of the time in this area the buyer doesn't want one because of the $$$. Secondly, the HI report should be provided to the lender and the UW can read the report and hopefully make a decision from the expert. Finally, I also believe there can be some liability on our part for requiring that items be repaired based on what a HI report says if in fact the information turned out to be wrong. Kind of a damned if you do and damned if you don't. Hopefully, Brad Pack may jump in here soon and address this issue. As Larry Lyke stated, HUD isn't clear about reporting any info we see on the HI report in the VC Sheet. Just another HUD gray area. If HUD could issue a clear policy (Yes I'm Dreaming) on how to handly this problem I would be happy to change.
 

Ben Vukicevich SRA

Senior Member
Joined
Feb 9, 2002
Professional Status
Certified General Appraiser
State
New Jersey
It's simple. If there are MPS violations on the HI report, you VC them for correction. If there are MPS violations listed in the seller's disclosure in the sales agreement, you VC them. A MPS violation is a MPS violation no matter who sees them. It would be just like a 203K. The appraiser reviews the FHA consultant's report for MPS violation corrections. You'd be surprised how many FHA consultants do not know that smoke detectors are required for 203K's and don't require them. You as the appraiser and MPS King, must force the FHA consultant to revise his report and require them. The buck stops with the appraiser as far as MPS repairs.

USPAP requires the appraiser to examine the sales agreement so you can't ignore MPS violations listed there. But as Larry H states, it's up to the appraiser to persue the HI inspection if they want to and no one is required to give a copy to the appraiser. Personally, I don't persue the HI inspection. Not my job. That's between the buyer and the inspector. Just like the FHA appraisal is between the client and me. I report what is readily observable. I don't "crack" pressure relief valves to see if they're plugged. My job is to ensure that one is installed. That's as far as it goes.

So if the home inspection report comes with the FHA appraisal order and the sales agreement, I'm then forced to look at it for MPS violations and the violations are VC'd referencing the HI reported deficiency. If it's not included with the agreement....then it's still in the private domain and not public information for all to see....

Ben
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Top

AdBlock Detected

We get it, advertisements are annoying!

Sure, ad-blocking software does a great job at blocking ads, but it also blocks useful features of our website. For the best site experience please disable your AdBlocker.

I've Disabled AdBlock
No Thanks