New Construction FHA question

[Reagan1234]

Can you make an FHA appraisal "As Is" for a new construction if the borrower plans to finish the punch out details and light fixtures? I am new to FHA appraisals. I made the report subject to completed items.. the subject is approximately 95% complete with small detail items to be completed. I'm getting a request from the lender saying that the buyer is to complete these items and requesting to make the appraisal "As Is". One of the items is the garage door opener is not installed. The contract states the garage door opener is only a rough-in. I was also not able to open the slider door in the basement. Would the appraisal need to be subject to the opener being installed even though the contract states it is a rough-in and do all exterior doors need to be opened?

Thanks for your help

 

[RSW]

Can you make an FHA appraisal "As Is" for a new construction if the borrower plans to finish the punch out details and light fixtures? I am new to FHA appraisals. I made the report subject to completed items.. the subject is approximately 95% complete with small detail items to be completed. I'm getting a request from the lender saying that the buyer is to complete these items and requesting to make the appraisal "As Is". One of the items is the garage door opener is not installed. The contract states the garage door opener is only a rough-in. I was also not able to open the slider door in the basement. Would the appraisal need to be subject to the opener being installed even though the contract states it is a rough-in and do all exterior doors need to be opened?

Thanks for your help

the FHA does not like things unfinished. For new construction less than 90% complete the report should be made subject to the repair of the items not yet complete. Anything 90% or more should be made subject to per plans and specifications. Your lender is incorrect.

This is taken from the revised appendix D, page D-1:

The FHA Appraisal is made Under the following conditions
A. “As Is” 1. There is/are no repair(s), alteration(s) or inspection conditions
noted by the appraiser, or
2. Establishing the “as is” value for a regular 203(k), or
3. The property is being recommended for rejection
B. “Subject to Completion per
Plans and Specifications”
1. Proposed Construction where construction has not started, or
2. Under Construction but not yet complete (less than 90%), or
3. Regular 203(k)
C. “Subject to the following
Repairs or Alterations”
1. Repair or Alteration Condition(s) noted by the appraiser, or
2. Streamline 203K, or
3. Under Construction, more than 90% complete with only minor
finish work remaining (buyer preference items i.e., floor
coverings, appliances, fixtures, landscaping, etc.). This
eliminates the need for construction exhibits.
D. “Subject to the following
Required Inspection”
1. Required Inspection(s) noted by the appraiser

 

[Reagan1234]

Thank You

Thank You RSW

 

[RSW]

Thank You RSW

No problem!...

 

[Bill Streep]

the FHA does not like things unfinished. For new construction less than 90% complete the report should be made subject to the repair of the items not yet complete. Anything 90% or more should be made subject to per plans and specifications. Your lender is incorrect.

RSW, I think you have this backwards, right? The HUD quote has it right.

OP, a garage door opener shouldn't be an issue - it wasn't on the contract, and they aren't required. Doors should open, however. That's a safety issue (unless there is other suitable egress). Additionally, electrical fixtures missing/inoperable are generally a flag. However, if a light fixture, for instance, is roughed in (and the wires properly wire nutted), rooms aren't required to have lights. If you could plug in a lamp, you are still OK. You WILL need to include a cost to cure, as the market might require these items to be completed.

 

[RSW]

RSW, I think you have this backwards, right? The HUD quote has it right.

OP, a garage door opener shouldn't be an issue - it wasn't on the contract, and they aren't required. Doors should open, however. That's a safety issue (unless there is other suitable egress). Additionally, electrical fixtures missing/inoperable are generally a flag. However, if a light fixture, for instance, is roughed in (and the wires properly wire nutted), rooms aren't required to have lights. If you could plug in a lamp, you are still OK. You WILL need to include a cost to cure, as the market might require these items to be completed.

I don't believe I do.

B. “Subject to Completion per
Plans and Specifications”
1. Proposed Construction where construction has not started, or
2. Under Construction but not yet complete (less than 90%),

C. “Subject to the following
Repairs or Alterations”
1. Repair or Alteration Condition(s) noted by the appraiser, or
2. Streamline 203K, or
3. Under Construction, more than 90% complete with only minor
finish work remaining (buyer preference items i.e., floor
coverings, appliances, fixtures, landscaping, etc.). This
eliminates the need for construction exhibits.



I just used a different wording in my response.

 

[Reagan1234]

New Construction FHA

In the original report I made the appraisal subject to completion for

a. appliances
b. finish work such as paint touch-ups and small punch out items
c. garage door opener not installed
d. light fixtures not installed
e. door in basement not opening

After rereading through the 60 page contract it appears as though garage door and light fixtures are both rough-in and the only appliance included in the contract is the range hood.

Basement has other suitable egress so that takes care of the door.

So the only items I have remaining to be completed are the range hood and touch up work. Would you still make the report subject to with such small items that need to be completed? When looking at the HUD guidelines it appears as though anything over 90% would be Subject to needed repairs if property is incomplete.. appliances were mentioned as an example. Am I being too picky?

Also when doing a cost to cure for the light fixtures and garage door opener do you do a line item on adjustments? How would you handle this?

Thanks in Advance

 

[RSW]

In the original report I made the appraisal subject to completion for

a. appliances
b. finish work such as paint touch-ups and small punch out items
c. garage door opener not installed
d. light fixtures not installed
e. door in basement not opening

After rereading through the 60 page contract it appears as though garage door and light fixtures are both rough-in and the only appliance included in the contract is the range hood.

Basement has other suitable egress so that takes care of the door.

So the only items I have remaining to be completed are the range hood and touch up work. Would you still make the report subject to with such small items that need to be completed? When looking at the HUD guidelines it appears as though anything over 90% would be Subject to needed repairs if property is incomplete.. appliances were mentioned as an example. Am I being too picky?

Also when doing a cost to cure for the light fixtures and garage door opener do you do a line item on adjustments? How would you handle this?

Thanks in Advance

You are correct. Subject to needed repairs with a cost to cure. The FHA does not like things not finished. Do a lump sum for the CTC.

 

[Reagan1234]

New Construction FHA

Thanks Again

 

[Noreen]

Reagan, you have to remember, your "hat" so to speak is to ensure to HUD that they have an "insurable" loan to THEIR Minimum Property Standards.... many lenders lose their FHA origination rights for not playing by the rules. Sorry, doors must work, electrical junction boxes capped, range hood installed.... DO NOT CARE WHAT LENDER WANTS... WHAT DOES HUD SAY... my 2 cents... if you are new, they will field review your work specifically, do not lose your FHA appraisal approval because of misinformation.... email your local HOC, print off their answer and put it in your file folder if you are at all unsure....