Appraisals Vary Between Loan Types
Agents and borrowers alike often find the appraisal process confusing and opaque – it’s why we consistently field questions on what appraisers look for when inspecting a property and how agents can best prepare. Not only can appraisers’ opinions on value make or break a deal, but they also play a crucial role in determining if the property in question meets all health and safety standards required for a clean appraisal (also referred to as the Minimum Property Standards, or MPS).
Though an appraisal does not replace a full home inspection, Underwriters and Investors rely on the appraiser’s report to determine if the property meets the MPS – this is true of conventional, FHA, and VA appraisals.
FHA and VA appraisals do, however, have slightly different health and safety checks that are required during the home inspection. Because these different checks can be difficult to parse out online, we created a list below of the common health and safety checks required of all 3 types of appraisals, and the specific checks required for only FHA and VA.
Conventional, FHA & VA Appraisals
- Verify that the water heater is properly double strapped and vented
- Validate every bedroom has 2 points of egress
- Verify that there are properly placed CO and Smoke detectors
- Identify any exposed wiring or missing electric box cover plates
- Address any water damage issues
- Verify adequate heat source
- Check for evidence of termite damage
- Check for signs of foundation damage
- Verify no other obvious health and safety issues present (broken glass, broken doors/walls, animal droppings, etc.)
- Verify that stairs and decks have proper railings
FHA & VA Appraisals
- Identify any chipping, peeling or cracked lead-based paint – interior and exterior
- Verify the property has proper drainage
- Test for permanent working heat-source
- Test for adequate water pressure (both hot and cold) and ensure no water leaks
- Ensure major appliances/garage door opener work
- If garage is attached, ensure the door from house to garage is self-closing with a fireproof door
- Verify roofs have at least a 3-year remaining life or call for a roof inspection to confirm
- Complete a head and shoulder inspection of attic and crawl space
- Clear Section 1 Pest Inspection (this is not part of the appraisal process)
- Certain heating systems, like solar, require a more standard “backup” system
This blog was written by JVM’s Appraisal Manager.