Why Underwriters Request Inspections; Handyman Before Appraiser

We recently had an “as is” transaction blow up because the appraiser called out significant wall cracks and dry rot. Appraisers can turn a blind eye to minor deferred maintenance, but they have to call out major (visible) items or they will lose their license.

When our underwriter saw our appraiser’s photos, she asked for a termite inspection (and probably could have asked for a foundation inspection too). She too has no choice in the matter when she sees photos like that.

The termite report has over $10,000 of work that the seller refuses to do, so the deal is effectively dead. I should add that all the report items are relatively minor and that the property is structurally sound (we wouldn’t finance a deal if we knew there were major issues).

In any case, there is no way this property will ever get financing as long as the deferred maintenance issues are visible.

When parties insist on an “as is” transaction for a property in need of TLC (and they don’t want to share inspections), they should send a handyman to fix all the visible issues before the appraiser shows up. In the case of the above referenced transaction, it might have cost $1,500 at most, but it would have saved the entire $600,000 purchase.

Again – if there is significant visible deferred maintenance issues, appraisers have to call it out and underwriters have to call for inspection reports.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167