Common issues on FHA/USDA appraisals
Appraisals performed for loans backed by the FHA (Federal Housing Administration) or the USDA (U.S. Department of Agriculture - Rural Development Loan) require homes to be in a specific condition and have specific requirements (called "minimum property requirements"). As FHA-approved appraisers we are required to observe and report these issues on FHA and USDA appraisals based on these requirements. Below is a sample of some of the more common issues we find when we visit properties for FHA and USDA assignments.
This list is not intended to be a complete list of ALL possible FHA issues. You are encouraged to review the FHA Handbook version 4000.1 for complete details which can be found by clicking here.
If you have questions about a specific assignment, please contact us.
Common issues found:
Peeling paint - Any home built before 1978 could potentially have lead-based paint and all painted surfaces (inside and outside) should be properly repaired with no peeling paint or paint chips. Even if the home was built after 1978, the home should not have missing or damaged paint if it is needed to protect surfaces from water and weather.
Wood rot - The home must not have wood rot on the exterior that will allow for water to get into an exterior wall. Common areas this is seen are eaves, trim, lower edges of siding and around windows.
General safety issues - The house must not have any safety issues such as trip hazards, missing plumbing connections, unstable or dangerous structures, etc. (such as outbuildings). There should be proper handrails if there are stairs where this could be a safety hazard.
Electrical safety issues - While appraisers are NOT electricians, electrical issues that are commonly observed include missing plug/switch plates, exposed electrical wires in the living area, uncovered electrical panels, missing GFCI plugs near water sources (or GFCI circuit on the breaker, depending on local code)
Utilities - FHA requires that the appraiser observe that the mechanical systems of the home are functioning. For this reason, at the time of the appraiser's walk-through of the property all utilities (including water and electric service) must be turned on.
Attic and crawl space access - FHA requires appraisers to make a "head and shoulders" view of the attic space and any crawl spaces when it is safe to do so. Many times the attic access is in a closet or other part of the home not readily accessible. Personal property should be moved from these areas to allow the appraiser to access the attic where feasible. Similarly, if the crawl space access point is secured or screwed shut, it should be opened (where possible) for the appraiser to view the crawl space.
Basement dampness / foundation cracks - while appraisers are not foundation experts and cannot detect all potential foundation issues, any obvious issues that the appraiser observes with the foundation, basement dampness or negative drainage on the outside (i.e. land sloping TOWARDS the foundation instead of away) are reported on the appraisal and will need to be addressed by a qualified expert in most cases.
It is important to note that the appraiser's walk-though is NOT a home inspection and is NOT intended to reveal all possible defects in the home nor is the appraisal a check of "code compliance". Owners, buyers and lenders are strongly encouraged to get a home inspection from a qualified home inspector. Veritas Appraisals and Consulting, LLC makes NO warranties as to the specific condition of a home that we appraise nor any potential defects.
Appraisals performed for the Veterans Administration (VA) have similar, but not duplicate requirements. We also have a list of Common Issues on VA Assignments or you can view the VA handbook found at this link on the VA website.