Property Checklist for appraisal items
Often, buyers get confused about the role of a home inspector and an appraiser. The home inspection is for your benefit and should cover all the major components of the home: electrical, plumbing, HVAC/heating, roof, structure. An appraiser completes an appraisal which is a home valuation for the lender. There are property minimum standards guidelines that the appraiser must insure are met.
There are different guidelines an appraiser has to follow depending on the type of loan that is being done. The main types of loans are Conventional, FHA, VA, USDA and Non-QM loans (all kinds of loans that do not fit into the previous categories). Additionally the type of property (land, single family, condo, manufactured home) also may have specific guidelines. It’s a lot! And, a buyer isn’t going to need to know all the details about the appraisal.
However, there is a preliminary checklist of things that you can look at yourself either when viewing the home or during the home inspection that can help you prep for issues that an appraiser may have to note on the appraisal. If an appraiser marks the appraisal as “subject to” any of these repairs, then the repairs need to be made and the appraiser will have to return to do a re-inspection of the repaired items (there is a fee for this and this may pose delays in closing).
Traditionally FHA, VA and USDA loans have more stringent guidelines for a property appraiser. The conventional appraisals have tightened up more in the last 10 years so they are more similar these days, but the perception in the industry is that a VA or FHA appraisal is still tougher on the property. So, I am going to note here that Fannie Mae (Conventional) guidelines for appraisals also includes property requirements and the guidelines state an appraiser must note any physical deficiencies that affect the safety, soundness or structurall integrity of the subject property.
This checklist is not going to cover everything that is required. However, it covers a lot of the items and is a great checklist to review when you are purchasing a property so you can better negotiate up front and be prepared ahead of time. The biggest issue with FHA and VA is safety and they want to make sure the home is as risk free as possible. Many of these items are also required for a conventional loan- so go ahead and use it even if you are doing a conventional loan and check with your lender if you see any of these issues and wonder if it could be an issue.
FHA/VA/USDA Property Requirements For The Home’s Interior
These loans have certain conditions that have to be met for the home’s interior to pass appraisal standards. We are listing these because they are the most comprehensive when dealing with loan appraisals. These don’t include cosmetic issues that are easily fixed.
Common issues impacting appraisals from an indoor standpoint are the following:
Home Systems And Appliances
The appraiser has to make sure that a home’s systems are functional. The same goes for any major appliances that are going to be coming with the home.
Basement, attic and Crawl Space
The appraiser will make sure these areas are well ventilated with no signs of critters or visible damage.
Bathrooms
In addition to the electronics checks described earlier, GFCI should be to code and the sinks and toilets in the bathroom must be working and hot water must be available
Kitchen
If there are appliances included in the sale, they should be in good working order and there should be no hazards posed by them. The sink must have hot water.
FHA/VA/USDA Property Requirements For The Home’s Exterior
In addition to the inside of the home, it's exterior will also be inspected. If a home has any of the hazards listed below, the need for repairs is likely.
Property Access
The subject property needs to have sufficient access to a street or other means of access so that future owners can easily make their way to the property year-round.
Roof
The roof must have at least 2 years of life left. The appraiser will check for things like holes, loose or missing shingles, and proper connections to gutters and downspouts.
Foundation
In order to pass inspection, the foundation must be properly graded and have sufficient drainage so as not to cause water damage. There shouldn’t be any cracks in the foundation or signs of significant settling. Finally, it should adhere to local building codes and present no concerns regarding durability.
General Interior Checklist
¨Appliances working
¨Heat source working
¨ Hot water heater drains properly into a proper pan or according to code
¨ Electrical system working
¨ No exposed wires
¨ No missing or cracked outlet covers
¨ All stairs have accessible handrails that are to code
¨ No chipping paint
¨ No asbestos or any hazardous materials are on the property
¨ No exposed wires
¨ GFCIs are in the “wet areas” and are working and to code
¨ Hot water is available
¨ There is a working sink, shower/bath, and toilet
¨ No evidence of leaks
¨ Smoke detecors are in the home, properly working and up to code
¨ Carbon monoxide detectors if required, are in the home, properly working and up to code
¨ No exposed concrete – there must be adequate flooring in all rooms
¨ Attic has adequate access, proper ventilation, is critter free and has no visible leaks or damage
General Exterior Checklist
Please note that in addition to the home the structures such as sheds, pool houses, outbuildings must meet these guidelines as well.
¨ No large cracks in the driveway or sidewalk that could be a trip hazard
¨ Decking does not have loose boards, missing handrails, or trip hazards and has handrails according to code
¨ Foundation appears solid
¨ Roof appears to have at least 2 years of life and there are no missing shingles
¨ Gutters and downspouts (if applicable) are intact with no visible damage and functioning properly
¨ No large cracks are visible around the home
¨ Electrical outlets- open, uncovered, missing covers, cracked covers are minor but must be fixed
¨ No improper or exposed wires/wiring
¨ The septic system (if present) must be functional
¨ Property must be free of soil contaminants
¨ No underground storage tanks
¨ Site must adequately drain water away from the perimeter of the walls
¨ Must have an acceptable and sufficient water supply
¨ Must have safe and sanitary sewage disposal
¨ No evidence of termite infestation
¨ No visible wood rot. Check around the home for any signs of wood rot- even a small quarter size spot (often found at bottom of door jambs or around windows) must be noted by the appraiser
¨ Property must have safe and adequate access to cars and pedestrians from a public or private street
¨ No presence of any defective conditions, including but not limited to, poor construction, leaks, decay, large cracks in siding or concrete.
¨ Any basement or crawlspace has sufficient access, adequate ventilation, no visible signs of damage and is critter and termite free
¨ Mechanical systems must be safe, protected from destructive elements, functional, durable and of decent quality
¨ Heating sources must be safe, functional and meet any local requirements
¨ Electricity must be available for lighting and any equipment used
¨ No broken windows,
¨ No blocked doors
¨ No steps without a handrail
¨ No unpainted wood
¨ No peeling paint
Please note, this list does not cover all of the items an appraiser will be looking for, and appraisals are subjective. So, each appraiser would be following the guidelines as they interpret them.