Typical Conventional Appraisal? (subject To Items)

[jimmiesner]

Hello,

We had a home sale fall through because the appraisal came back subject to the below conditions, our bank agreed and as a result we we're unable to meet the time frame requirements of the seller for the sale and had to back out.

However our inspector saw the same things but listed them all as marginal and believed the house was in good condition. We really love this home and asked another lender their opinion on the appraisal and they said the below conditions sound like an FHA appraisal (though we are getting a conventional mortgage).

CONDITIONS
1. Some mold was found in the attic.

- The inspector felt it was marginal and had thirty years of remaining life left if nothing was done. He recommended installing baffles and that could fix the problem without mold remediation being necessary.

- The appraiser made the loan subject to an inspection by a qualified contractor. Our bank agreed.

2. The gutters have plant growth in them.

- The inspector made note of some plant growth in the gutters as it has been some time since they had been cleaned and classified it as marginal.

- The appraiser made the appraisal subject to inspection of the gutters. Our bank agreed and also wanted the roof inspected as well.

3. There are two small gaps along the concrete slab foundation of the garage.

- The inspector classified it marginal but recommended they be filled at some point.

- The appraiser made the appraisal subject to inspection by a qualified structural contractor. Our lender changed this to a structural engineer (much more expensive). I was told because the world structural was mentioned that was what they had to have.

4. The water was not on at the time of either the inspection or appraisal. My realtor was able to get it on after the inspection and there were no leaks but a small pipe was open in the basement and we got a minimal amount of water on the floor of the basement.

So the appraisal was so done with no water on as well, the appraiser saw also some some water on the concrete from when we got the water on and the appraisal was made subject to inspection of the plumbing by a qualified contractor. Our bank agreed.

5. In addition to the inspections the following items had to be repaired prior to closing:

- Single detached step along rear deck to be made permanent.

- Correct peeling paint in bedroom on one window sash.

- Install GFCI outlets in bathrooms

- Replace door leading from garage into home (door knob broken).

- Replace missing bathroom ceiling fixture.

Could you give me your thoughts as to whether you think an FHA or conventional appraisal was done? It is important as we would like to try again with the other bank to see if we can finance this home.

Is a conventional normally subject to those conditions. When I looked online at sites one said a conventional loan was not subject to having things like peeling paint, GFCI outlets installed in bathrooms or inspection of the attic. I looked all over to see if any conventional loans are subject to the installation of GFCI outlets but only find information that FHA loans are sometimes subject to that. Please give me your thoughts and opinions. We really want to purchase this home!

 

[gregb]

Seriously, you don't know as the buyer, whether you applied for an FHA or Conventional loan?

 

[Michigan CG]

If you are getting a conventional loan then the appraiser is an idiot.

If you are getting an FHA loan the appraiser is over-stepped his authority. He cannot call for inspections on everything just to cover liability.

Was the house built prior to 1978? If not then the peeling paint is a non-issue.

FHA (or conventional) does not require GFI outlets. Appraiser needs to take an FHA class.

Broken door knob is $10, hardly something to hold up a loan.

Replace a light in the bathroom? OMG.

 

[Terrel L. Shields]

Sounds like a CYA situation. Someone is gun shy

 

[jimmiesner]

Seriously, you don't know as the buyer, whether you applied for an FHA or Conventional loan?

Sorry if I wasn't clear. I'm getting a conventional loan but had problems with my old loan officer and wondered if based on the previous information if he might have accidentally ordered an FHA appraisal.

Also I forgot to mention the home is a foreclosure 'As Is', which is why there is a tight time frame.

 

[NachoPerito]

This definitely seems out of control.

 

[Mike Kennedy]

Item 1 "Our Bank agreed." p.s. there is visible mold and hidden mold in the attic that can, over time, travel down into living area walls; mold is a health issue not to be taken lightly. I concur with both the Appraiser and your Bank.
Item 2 "Our bank agreed and also wanted the roof inspected as well." Once substantial moisture and neglected maintenance causes foliage growth (visible in gutters and often invisible under roof shingles) it also damages plywood sheathing. I concur with both the Appraiser and your Bank.
Item 3 given #1 & 2, and in the absence of how long the settlement cracks in the garage foundation have existed, it is likely rain water infiltration has occurred which undermines the safety of the slab and garage walls. I concur with the Appraiser and your Bank.
Item 4 In the absence of any data on how long the water had been off, as of the Effective Date of Appraisal, I concur with the Appraiser and your Bank.
Item 5 "as-is" cosmetic deferred maintenance items do not require correction unless they exhibit a health or safety risk. I disagree with the report on this item.

Better to find out the dwelling needs thousands of dollars in repairs & remediation NOW vs after you move in. Yes, they are items which should/would be addressed in a conventional loan appraisal. I would thank the Appraiser for the opinion, clearly your Bank would agree. It is not personal - whether the possible buyer is you or another party, the Bank is the Client. I would make no decision absent Mold, Roofing, and Structural inspections - IMO, based on the info provided, Prudent Buyers would require opinions from Licensed experts in those 3 fields prior to making an informed buying decision. Meanwhile it may also be prudent to visit a couple of other properties for sale.

 

[Randolph Kinney]

 

[RSW]

Sounds like the appraiser did a good job with the exception of a few items. I would have mentioned those items in a FHA appraisal and even a conventional appraisal. It does sound like the appraiser completed the inspection per FHA appraisal protocol. Some appraisers do that even for conventional loan appraisals. I used to do that for one of my clients because they had a bad habit of asking me to convert it over to a FHA appraisal weeks later.

This is what I would have done if this were a FHA appraisal:

The mold found in the attic could be a problem. The appraiser is not a mold expert. He/she was correct in making the appraisal subject to an inspection.

The plant growth in the gutters could be preventing positive drainage away from the foundation. I see that quite a bit. The water could also be backing up and running into the roof system or down the inside of the exterior walls. Good call by the appraiser.

The gaps along the concrete slab foundation of the garage could be a structural problem. I agree and would have recommended an inspection.

I would have made the appraisal subject to the water being turned on and an inspection of the plumbing system by a qualified professional.

I would have also made the appraisal subject to an inspection by a qualified professional to determine the source of the water in the basement. I don't know and the appraiser does not know the source of the water. It may have been a simple plumbing leak. As Ronald Reagan said, "Trust but verify."

The detached step on the deck could have been a safety hazard and is is most likely it needed replaced.

The peeling paint on the window sash is questionable depending on the age of the dwelling. Was it built prior to 1978 or after. There is a good chance lead based paint is present if built before 1978.

I would not have recommended the GFCI outlets in the bathrooms. I would have only checked to see if they were functional.

The door leading from the garage is also questionable. It would have been cheaper to just replace the door knob and not the whole door. Was there other issues with the door?

I would have made the report subject to the bathroom ceiling fixture being replaced if there were exposed wires present.

 

[stripes]

Sorry if I wasn't clear. .

No apology needed, you were clear.

IF you were getting an FHA insured loan, the appraiser would need to perform some additional observations and reporting to meet FHA requirements. However, it's good practice to be thoroughly observant for all appraisals. The main consideration by an appraiser should be safety of occupant and integrity of structure.

Mold should be an issue you would like resolved. An appraiser is not trained in this area. I would have no problem with an appraiser reporting it and requiring an inspection by an expert. BTW, home inspectors aren't experts either.

For all of the other "issues", again I would not fault an appraiser for noting them in the report (and I wouldn't call him/her an idiot either), but in my opinion none rise to the level of making them "subject to" an inspection or repair/replace. Ultimately, the lender makes the call.