Ocean City Today

Home appraisal important step for all involved

Real Estate Report
By Lauren Bunting | Nov 02, 2017

(Nov. 3, 2017) The appraisal of a home is an important step in the real estate process, and one that can certainly make or break a deal.

An appraisal is a valuation of a property done by a professional, licensed individual who prepares a comprehensive report for a client, which is an opinion of the value of the home at that specific point in time.

If the loan being sought is a conventional loan, the appraiser’s report will be a straightforward opinion of value, usually without comment, on the condition of the property. But, when the loan being sought is a low-money down loan such as Federal Housing Administration, United States Department of Agriculture, or United States Department of Veterans Affairs loan, then there is an added layer of scrutiny in addition to value.

When a low-money down loan is being used, the appraiser has two objectives. The appraiser is required to determine the current market value, but they also require a property inspection to make sure the home meets minimum standards for health and safety.

This double duty role for the appraiser includes checking for health and safety aspects of a property. Here is a checklist provided by FHA of the key inspection areas required by the Department of Housing and Urban Development:

• The lot should be graded in a way that prevents moisture from entering the basement and/or foundation.

• All bedrooms should have egress to the exterior, for reasons of fire safety. A bedroom window will suffice, as long as it’s large enough to allow egress.

• Many homes built before 1978 still contain lead-based paint, which is a potential health hazard. In these homes, the appraiser will check for damaged paint (peeling, chipping, etc.). Such conditions must be corrected before the loan will go through.

• All steps and stairways must have a handrail for safety. This is a commonly cited discrepancy during FHA appraisals.

• The heating system must be sufficient to create “healthful and comfortable living conditions” inside the home.

• The roof should be in a good state of repair and must keep moisture from entering the home. It should “provide reasonable future utility, durability and economy of maintenance.”

• The foundation should be in good repair and able to withstand “all normal loads imposed” on it.

Lauren Bunting is a licensed Associate Broker with Bunting Realty, Inc. in Berlin.

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