We Tell it Like It Is

I'm going to repeat myself for a moment; for the sake of anyone reading this that hasn't read past blogs.

An appraisal is done once a buyer has a signed purchase agreement on a property and once they have completed their private home inspection. The appraisal is ordered by the buyer's loan officer and is conducted so that the lender knows they are lending the buyer the appropriate amount of money for the home. Since the appraisal is being conducted because the buyer wishes to purchase the home, the buyer is required to pay for it. Appraisals cost anywhere from roughly $450-$550 and the lender will either ask for that fee from the buyer up front, or oftentimes, they will take the money out of the buyers closing costs at the closing.

Most buyers right now are using FHA loans because they require the least amount for a downpayment. When this is the case, a special FHA appraiser must be the one to conduct the appraisal. Not only are they looking to make sure the home appraises at the value that its being sold for, but they are also making sure the home is "livable" and that it meets FHA living standards. If the appraiser finds something that he/she feels does not meet these standards, they will issue a "work order".

A work order is written up and submitted to the lender who then contacts the buyer (or I). The work order states what the issue is and how it needs to be fixed. The work order must be fixed BEFORE the buyer can close on the home. Some examples of work orders that have been written up in my past transactions:

--Doorknob is missing to the door going out to the garage & needs to be replaced.

--Broken windows, window cranks/hardware need to be replaced

--Smoke detectors not operating & need replacement

--Toilets not flushing properly

--Leaky pipes

--Chipping paint on inside or outside of house or garage

--Garage door or service door not working or in bad shape

--Evidence of leakage from the roof w/out recent replacement of the roof

--Bathroom venting/fan not working

--Insufficient amount of insulation in roof area

Who completes the work orders depends on who the seller is. If you are buying a foreclosure, the buyer must take care of these items. If you are purchasing from an actual homeowner, these work orders are negotiable. Nonetheless, they must be done asap and the appraiser must come back to reinspect before you can close on the purchase. Can appraisers reinspect and find the repairs not good enough? They sure can. And they charge you for every inspection. Usually $100 per additional visit after the initial appraisal.