It can be very frustrating for a homeowner or real estate agent when you get feedback from the lender that there are certain items that must be repaired before closing. That’s why it is important be aware of minimum FHA appraisal standards before a real estate appraiser visits your home. The following are the most common repairs I encounter in the Chicago area for which you should be prepared. Many of these could be corrected prior to the appraisal inspection for relatively little time and cost. This will insure that additional inspections are not required and prevent any re-inspection related delays.
Chipped/Peeling Paint: As per FHA, any chipped or peeling paint in homes built prior to 1978 must be corrected. That means the defective paint must be scraped, sanded and repainted to comply. Also, all of the paint chips must be picked up off the ground and disposed of properly. With all of the Cape Cod, Bungalow style homes in the Chicago area, this is one of the issue I come across most. 87% of homes built prior to 1940 contain Lead-Based Paint. See the this link to the EPA website for more information on Lead-Based Paint.
Utilities should be on and operational at the time of the inspection: The appraiser has to check all the utilities and mechanicals to insure they are on and operational. That includes those homes that are vacant and were previously winterized. They must be de-winterized to avoid have a re-inspection and possible delay in the closing. Utilities include heating/cooling systems, dishwashers, stove, lighting, and plumbing items such as faucets and toilets.
Lack of a Carbon Monoxide Detector: Effective January 1, 2007, every Illinois home must have at least one carbon monoxide alarm in operating condition within 15’ of the bedrooms. Even if you have bedrooms on both sides of the house, a detector needs to be installed in each area. The same rule holds for smoke detectors. See the IDPH website for more info on what Carbon Monoxide is and why it is dangerous.
Broken Windows: Small cracks in the windows are not big issue with FHA. However, if the crack is more substantial or if the window is broken with exposed shards of glass, it is a safety concern and FHA requires this to be fixed.
Missing Appliances: If there are missing appliances where an appliance obviously belongs, that will need to be corrected. For example, if there is space for a dishwasher, but it is missing, that is a problem. If there is not obvious space where a dishwasher is supposed to be, then it is not an issue. Also, the appliances that are there must be in working order.
Exposed/Frayed or Uncapped Wiring: This is due to the “safety concern” that it would present. These wires could cause a big jolt and must be correct. If they are in the ceiling where a light fixture used to be, install a new fixture. Missing light switches and outlet covers also must be replaced.
Attic and Crawl Space Access: The appraiser is required to complete at a minimum, a “head and shoulders” inspection of the attic space. There should be adequate right of entry to the attic and crawl space. That means if your scuttle to the attic is located in a small closet that has clothes and boxes stacked to the ceiling, they need to be removed prior to the appraiser arriving for the inspection.
Please keep in mind that an FHA appraisal is not a guarantee that a property is free from all defects. The appraisals primary purpose is to establish a value for the home for mortgage insurance purposes. I always recommend that the buyer of a home always hire a licensed/certified home inspector that are trained to “dig deeper” into the overall condition of the home.
The ‘Rowe Appraisal Group’ specializes in divorce appraisals, bankruptcy appraisals, date of death appraisals, estate appraisals, pre-listing appraisals and more throughout the Chicago area.
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