Amy Parker - Appraise it Today Blog

January 16, 2009

Showing FHA Buyers Homes that Need Repairs

I just showed a client a less than perfect home and they are an FHA buyer, what will the FHA guidelines require to be fixed?

Over the last year many realtors have asked me this important question. In many cases, this is a specific question regarding a specific problem and the realtor wants general answers. The answer is not always simple and I am more then happy to provide consultation on the phone. But this month  the question has been more prevalent so a BLOG discussion is definately warranted.

Realtors need to understand that the FHA loan program is dependent on the HUD guidelines that are published for buyers, lenders, and appraisers. A link to these guidelines is found FHA Repair Information from HUD.doc and there is also a direct link to the HUD webster under the FHA Source at appraiseittoday.com website. Please note that these are guidelines and their interpretation is left to underwriters and lenders. I share with you some fairly black and white items from the underwriting world today.

HUD is concerned with safety, security, and livability of the property being insured under the FHA loan program. For the most part, they want the items to be fixed that make the home below average. Homes that are considered below average for the neighborhood will have the appraisal written “subject to repair”. 

The appraiser will be asked to describe items that are non cosmetic that make the home below average and in some cases they will have to provide a cost to cure the repair item.   In most cases the appraiser will be asked to reinspect the home prior to the close of escrow to confirm the repairs have been made.

What are some obvious things that could make a home below average?

• No heater
• No flooring
• No hot water
• Large holes in walls
• And much more

Photographs of recent home inspections are found below. These photographs show items that had to be repaired to meet HUD guidelines.

peeling paint.JPG

ceiling.JPG

exposed wood.JPG

water staining.JPG

Other items that I’m frequently asked about:

• Old roofs that are not certifiable for 2 years will typically require repair or replacement.
• Section 1 pest work will need to be fixed and certified as completed. New wood will need to be painted with primer at a minimum and not left exposed.
• Homes built prior to 1978 with peeling paint on any structure on the site will have to have this issue repaired and repainted.
• Un - permitted additions (this is a case by case scenario requiring consultation)
• Pools need to be safe and operational.  That means the pool needs to be filled with water and have an operational pool equipment.  Clean water is preferred.
• Appliances -  HUD prefers that homes have them.  Built in appliances that have been removed must always be replaced.

This is just a small list of items I’m frequently asked about.

I would recommend printing the Appraise it Today FHA Checklist of inspection items typically checked by FHA appraisers.   FHA INSPECTION CHECKLIST.pdf