Fischer: Red hot summer, thanks to appraisal aggravation
One-hundred degrees outside, but a cool and comfortable 72 inside, should have made for a pleasant morning. Not today. Although the temperature gauge read 72, my blood was boiling. I had just spent the entire previous day ensuring FHA appraisal-required repairs were complete on a vacant listing so the appraiser could go back out, check off the completed repairs and sign off on the appraisal so the home could close. However, rather than sign off on the previously requested repairs, this particular appraiser decided to make a new list of different repairs that now needed to be complete. Never in my career have I seen something like this. This is not how an appraisal, FHA or otherwise, is done.
Before continuing, I do want to make a disclaimer. I am not an appraiser, nor have I ever been. I also do not envy the job of an appraiser, especially an FHA appraiser. Not only are they assigned to determine the market value of the home, they also must assess the home’s condition and livability. FHA appraisers are required to follow stricter guidelines since an FHA-type loan is a government-backed loan (FHA stands for Federal Housing Administration) and generally offers less strict credit score guidelines as well as a lower down payment. This makes the risk higher for the lender (government), and so requirements for the property are tighter.
The Single-Family Housing Policy Handbook, a riveting read put out by the Department of Housing and Urban Development, details a long list of conditions for appraisers to review. These can be broken down into three major categories that impact home values: Physical features (foundation, roof, drywall, etc.), utilities and systems (water, electricity, sewage, appliances), and environment (pests, soil contamination, safety risks). Some examples of repairs required by FHA appraisers could include peeling paint, broken windows, leaking water heaters, bad roofs or exposed electrical lines. These are generally safety issues. In this particular home, I knew there was a possibility there could be some minor issues called out since the home had been vacant for a few weeks and had not been updated since construction (1978). However, although the home posed décor akin to that found in the Brady Bunch household, the roof was new, as was the entire HVAC system and the water heater. Granted there were a few items of maintenance that may have been deferred, yet those were manageable items if called out by the appraiser.
Within a few days of having the appraiser go out to the home, the appraisal was returned to the lender with the value at offer price but three required conditions before signing off on the appraisal so we could close. The conditions included scraping the paint from garage door and man door trim and repainting, repairing a patch of missing drywall and replacing a broken windowpane. Although I was surprised the appraiser didn’t require the peeling paint on the front door to be addressed, or the wires that were sticking out from the wall in the basement, we were happy to comply with the requests. After all, I had seen FHA appraisers miss glaring defects that I was sure would need to be addressed, but I had also seen appraisers who have required a missing towel rack to be replaced. I often quote Forrest Gump when referring to appraisers: “(It’s) like a box of chocolates. You never know what you’re gonna get.”
Once the requested repairs had been completed, we informed the lender so the appraiser could go back out and check them off and sign off on the appraisal so we could close. She was great about getting right back out there, except she returned with a new list of repairs. This is not standard. Once the appraiser makes the initial requests, they only go out to check the requested repairs. They don’t get to suddenly decide to make a new list. I called her immediately and let her know that these were not items she had called out before. She informed me that these new requested items were defects that had not existed in the home the first time she came out (three days before). THE HOME IS VACANT! These were all defects that were absolutely there when she went through the first time. In fact, two of these items I had pictures of, that had been taken at the same time as the listing photos so I could prove that they were there. She continued to deny, despite my physical evidence. We were deadlocked. She was holding the proverbial keys to the closing of this house.
After several conversations and texts from the lender, buyer’s agent and myself, she ghosted all of us and quit responding. We were all at a complete loss as to what the next step should be. At this point, I decided to call the appraisal company she works for and get some guidance. Within five minutes of the phone call, she texted and said she would respond in a minute as she was “in a meeting.” Less than two hours later, we got word that she had signed off on the appraisal and we were cleared to close.
Back in my air-conditioned car, I’m feeling a cool 72 degrees and my blood is back down to the comfortable 98.6.
Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or firstname.lastname@example.org.