You have received your Appraisal. Now What?
Everyone wants to see what the value is of their appraisal, but that is just the beginning of what the Mortgage Underwriter is reviewing. Here are some of the key items that can cause problems with the Appraisal:
- Value – That is the Easy one. The one we are all looking for. If the value is there, that is great!
- As Is, or Subject To – This pertains to the Condition of the Property
- AS IS – That is What we want to see. This means that no material changes are required to the property. YEAH!
- SUBJECT TO – This means that the Appraiser has noted some material changes or repairs that the property must have to meet FNMA/HUD minimum property standards.This can consist of things as small as a rotten window sill or as large as Roof needs inspection. Another item that we see here is utilities were not on at time of inspection. While Appraisers do not inspect HVAC, and electrical, they do check systems to see if they are running. Any items that are on the Subject to list will require repair and re-inspection by the appraiser. Repairs and inspection and re-negotiation can cause your closing date to be delayed.
- FNMA/FREDDIE MAC SSR – this is a new automated appraisal review that all appraisers have to run their appraisal thru. The appraisal is given a number between 0 to 5. A number above 4 may require a Desk Review and or a 2nd appraisal. A number above 4 means that the appraised value may be inaccurate.
- Comparable Homes used to determine value – If, after the Mortgage Underwriter reviews the comparable homes, they determine that the comps are not similar. They may ask for further explanation or additional comps from the Appraiser.
- Sewer or Septic – If there is a septic system on a vacant home, an FHA loan may require that there be a septic tank inspection.
These are just a few of the items that I see causing us the most problems. One Underwriter told me that they have a check list fo the appraisal that has over 30 items for them to review.
As with all faucets of a Real Estate Transaction, Having a licensed professional Realtor representing you can insure that your dream purchase does not become your nightmare purchase.