Subject to third party report

[PushinValue]

Can anyone point me to the section of the selling guide indicating the appraisers only responsibility is to make the report subject to a third party inspection (appraiser is not required to review the report).

Thanks

 

[NC Appraising]

B4-1.3-06, Property Condition and Quality of Construction of the Improvements (06/04/2025)

This topic contains information on property condition and quality of construction, including:

selling-guide.fanniemae.com

The appraisal report must identify and describe physical deficiencies that could affect a property’s safety, soundness, or structural integrity. If the appraiser has identified any of these deficiencies, the property must be appraised "subject to" completion of the specific repairs or alterations. In these instances, the property condition and quality ratings must reflect the condition and quality of the property based on the hypothetical condition that the repairs or alterations have been completed.


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If the appraiser is not qualified to evaluate the alterations or repairs, the appraisal must note the deficiencies and be completed "subject to" a satisfactory inspection by a qualified professional. The lender must decide if the inspection(s) is required and whether the property meets eligibility requirements. If the property does not meet eligibility requirements, the lender must provide satisfactory evidence that the condition has been corrected or repaired prior to loan delivery. In this case, the appraiser is not required to review the professionally prepared report, re-inspect the property, or provide a Form 1004D. The lender must document the decision and rationale in the loan file. See B4-1.4-08, Environmental Hazards Appraisal Requirements, for properties affected by environmental hazards.****************

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Infestation, Dampness, or Settlement​

If the appraisal indicates evidence of infestation (such as, wood-boring insects), dampness, or abnormal settlement, the appraisal must comment on the effect on the value and marketability of the subject property. The lender must either provide satisfactory evidence that the condition was corrected or submit a professionally prepared report indicating, based on an inspection of the property, that the condition does not pose any threat of structural damage to the improvements. The appraisal should be made "subject to" repairs or alternations, or "subject to" an inspection by a qualified professional.

 

[PushinValue]

So only have to view the report if there IS an issue that needs to be corrected. If you make an item subject to inspection, the inspection states "no health/safety/structural issue" the report does NOT have to be reviewed by the appraiser ?

 

[CGinMN]

It’s on the form. You’re making your appraisal subject to third party inspection based on the extraordinary assumption that the condition or deficiency does not require alteration or repair.

If the lender finds out otherwise, the properties is ineligible or it must be repaired to make it eligible. The lender shouldn’t be coming back to you at all, because you said you already told them you don’t have the expertise to determine if repair was needed, which is why subject to inspection and not subject to repair.

 

[NC Appraising]

Cg said it better than I could.

Most lenders would still (use to) send appraisers out to verify. Subject to foundation, other required repairs, etc. They would send us the invoice or statement and we would complete the 1004d. Mostly for verification.

I guess it changed within the past several years or lenders were doing it wrong to begin with?

I never minded "verifying" it. I never "cleared it".

I know for a fact that agents and sellers/buyers have their go to contractor to sign off on repairs or conditions. I always thought they sent us back out as a unbiased third party to verify that something was done.

But I guess covid screwed us again. I guess the borrower can just send a photo and sign something saying that it was done, along with a contractor receipt or statement.

 

[Zoe]

Cg said it better than I could.

Most lenders would still (use to) send appraisers out to verify. Subject to foundation, other required repairs, etc. They would send us the invoice or statement and we would complete the 1004d. Mostly for verification.

I guess it changed within the past several years or lenders were doing it wrong to begin with?

I never minded "verifying" it. I never "cleared it".

I know for a fact that agents and sellers/buyers have their go to contractor to sign off on repairs or conditions. I always thought they sent us back out as a unbiased third party to verify that something was done.

But I guess covid screwed us again. I guess the borrower can just send a photo and sign something saying that it was done, along with a contractor receipt or statement.

If client sends you certification from the licensed professional, nothing wrong with you going back and doing 1004d and including certification from expert that certified to it.

That is fine. The liability is off of you then and included in your 1004d.

 

[Zoe]

So only have to view the report if there IS an issue that needs to be corrected. If you make an item subject to inspection, the inspection states "no health/safety/structural issue" the report does NOT have to be reviewed by the appraiser ?

Who do you perform review work for? Or am I off base?

Don't name your client. Just tell me in a generic term. Like lender, etc.etc.etc.

 

[NC Appraising]

If client sends you certification from the licensed professional, nothing wrong with you going back and doing 1004d and including certification from expert that certified to it.

That is fine. The liability is off of you then and included in your 1004d.

Maybe.

Say the report was subject to a inspection by a qualified professional due to cracks in the brick veneer.

What are you certifying? You are not a qualified professional in that field, that is why you made the report subject to?

Unless you went to school or some how got the experience in the past two weeks to make that determination, what is the purpose of you going back out.

The only reason for you to go out is to tell the lender that repairs were noted...you cannot say that the repairs have been completed and corrected for any issues to the foundation, etc. In this situation, a contractor should make repairs and then a structural engineer should go out to verify.


In some situations, I still agree that we should go out and verify. I have personally been in several situations where the parties just had a contractor to sign off...nothing was done.

Whenever I make a report subject to repairs, the parties rarely make the repairs as needed. They always seem to do the bare minimum of what they think it should be or only complete the repairs in a sub standard manner.

 

[Zoe]

Maybe.

Say the report was subject to a inspection by a qualified professional due to cracks in the brick veneer.

What are you certifying? You are not a qualified professional in that field, that is why you made the report subject to?

Unless you went to school or some how got the experience in the past two weeks to make that determination, what is the purpose of you going back out.

The only reason for you to go out is to tell the lender that repairs were noted...you cannot say that the repairs have been completed and corrected for any issues to the foundation, etc. In this situation, a contractor should make repairs and then a structural engineer should go out to verify.


In some situations, I still agree that we should go out and verify. I have personally been in several situations where the parties just had a contractor to sign off...nothing was done.

Whenever I make a report subject to repairs, the parties rarely make the repairs as needed. They always seem to do the bare minimum of what they think it should be or only complete the repairs in a sub standard manner.

I am not the client. Don't get your panties in a wad. If client sends me cert everything is okay and wants me to go back and take pictures, I can do 1004d and include the certification client sends me.