ORDERING RUSH APPRAISALS TO SPOT CONDITION ISSUES UP FRONT
One of the reasons we order ALL appraisals as a “rush” (and eat the rush fee :)) is b/c it allows value and condition issues to surface right away. If we get the appraisal back within five days, we have ample time to address problems, or avoid substantial wasted effort altogether.
Recently, we had an appraiser flag some potential foundation issues b/c of large gaps in the foundation walls. The Realtors were unaware of the issues, and were caught off guard by the appraiser’s comments. But appraisers have to call out glaring condition issues (or they will lose their license), and the issue surfaced relatively soon after the contract was signed b/c our appraisal came in so quickly.
At a “normal lender” (with “non-JVM appraisal turn times”) this issue would not have surfaced for weeks.
AVOIDING CONDITION ISSUES
We recommend that Realtors do a brief interior and exterior inspection of every home prior to the appraisal inspection. If there are any glaring repairs needed (leaky roof, sloping stairs, missing floor coverings, gaps in the foundation), they need to be fixed before the appraiser shows up, or the appraiser has to call them out.
Repairs do not have to be especially thorough, but only enough to prevent the appraiser from flagging issues.
IF APPRAISER DOES CALL OUT ISSUES
If an appraiser does call out major condition issues, in most cases the repairs will have to be completed prior to close of escrow. This can create much bigger issues b/c sellers often do not want to do repairs in hot markets, and buyers don’t want to repair a home they don’t own.
When the repairs are done, depending on their nature, lenders either need an appraiser’s or a contractor’s certification that states the repairs have been completed satisfactorily.
INSPECTION REPORTS FOR MAJOR ISSUES
If the repair issues are significant, such as foundation gaps or a leaky roof, underwriters will call for inspection reports from engineers and/or contractors. B/c these reports often illuminate far more issues than were visible previously, the reports sometimes kill transactions altogether. This is a major reason why we recommend addressing all visible repairs issues prior to the appraisal inspection, whenever possible.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167