The FHA Appraisal – Which Homes Qualify for FHA loans?

I had a call last week from a woman who wondered where she could find out if certain homes for sale were approved for FHA financing. As I talked to her about the fact that, for the most part, it takes an appraiser to determine whether or not a home qualifies, I tried to explain what she would need to look for so she could avoid paying for appraisals on property that may not qualify. It occurred to me that there was a good blog post in that explanation so here it goes!

FHA appraisers do a different type of appraisal than appraisers for conventional loans. They are more concerned with the health and safety of the borrowers. They look at the standard things that all appraisers look at, and they take it a little further. FHA is not only concerned with the property value but is also concerned with things like handrails on steps, broken windows, lack of screens, evidence of rodent infestation and other issues that don’t affect a normal appraisal to the same degree. If the house was built before 1978 and may have the potential for lead based paint, the FHA appraiser looks for peeling paint. The FHA appraiser needs to see that the bedrooms have egress in case of a fire, the windows have to work and if there are burglar bars they need to have the code approved methods of opening them from the inside in case of a fire. They want to see smoke detectors. The FHA appraiser needs to see window screens if there isn’t central air conditioning. They look at the remaining life of the roof and the furnace and hot water heaters and want to see a stove in the kitchen. The utilities have to be on during the appraisal and they check that the various components are working. The appraiser looks for evidence of environmental contaminants like asbestos and mold. The FHA appraiser looks for earth to wood contact and other evidence of termites.

So for the most part, the home has to be livable. If the carpet can be cleaned or the house needs paint to make it clean and fresh, this will not generally be enough to cause the appraiser to require that the work be done before closing (or after). If you want to read the actual FHA appraisal guidelines you can see an article from HUD here. The basic HUD website can be found here and the FHA Appraisal page has an overview of the entire process.



  1. katie small says

    looking at buying a forclosed home on an fha 203k. ITs an old farm with 11 acres. The house needs apparent work that i am planning on. My question is the barn has some siding missing and a couple holes in the other side will i have to get that fixed before fha will approve? also the garage has some peeling paint i understand that will need taken care of will covering it with metal barn siding be sufficient for that?

  2. Maureen Hoskins says

    Hi Dan, I am not in your area but this thread came up in my search for what to do when you are having your house appraised, I was wondering if an above ground pool that fell in a few days ago would make a difference in an appraisal? We are now empty nesters so have decided to just extend the deck over where the pool was (the deck is double level and all Ipe) and put in a Gazebo and a hot tub instead but since the appraisal is soon we cannot have this done before then… my question is will having a deck that is not finished and you can see where the pool was affect our appraisal or will they realize when we tell them that we are replacing with something else appease them? Thank you for time…regards, Maureen

  3. alec says

    We are trying to buy a home and have been pre approved for an fha loan.
    The issue is that the home value per is $103k but it’s being sold for $150k now I’m worried that the fha will appraise the home for less than $150k because I can’t pay the difference
    I’m also concerned about paying for an inspection before the appraisal and losing $ $ if I can’t buy the house based on the appraisal
    Do you know if the inspection has to be done before the fha appraisal?
    Or can I do it after?

  4. shaun adams says

    Hey Dan, my wife and I are getting and FHA loan and have just ordered our appraisal. Here is our concern. The home is located in a rural area (on a golf course as well) and there have been NO comps in the surrounding area with one exception. A home sold in the area in December at 250K. It has more square footage 3000 to our 2580 and has more acreage as well. 7 to be exact and ours is on an acre lot. The seller had the house listed at 314,999 and we offered 300 with no closing costs on his end being that we will be getting credits. He accepted the offer but we fear that there are no comparables (even in 2013 the highest comparable home sold for 280) and becaused of that the appraisel will come in low.Thoughts?

    • Dan Connolly says

      Well it might come in low and then the seller will have to decide if he really wants to sell. The home that sold for 250K may have been larger but there are other factors at play, age and condition etc. Unfortunately you need to risk the cost of the appraisal to find out if you are going to be able to buy or not. I am an Atlanta Realtor so I have not had a lot of experience with rural appraisals. I have heard that if there are really no comps they might go further in distance or further back for a closing date, but really I don’t have any experience in rural appraisals so it is only a guess.

  5. Lew Kepler says

    Dan, I have been asked by a lender what the current protocol is for an FHA appraisal of a single family property with an in law apartment. It is legal, subordinate and it is not a 2 family. In years past, there was discussion that the kitchen may have to be ripped out and over the years some of the more harsh FHA rules seemed to have been relaxed on these type properties. Currently, what does an appraiser have to do on the URAR for an in law apartment other than mention that there is an ADU, describe it, and check the “one with Accessory Unit” box in the Improvements section? All I can find is how FHA describes and classifies these units, but no mention of how to report on it. I am assuming they would require at least 1 comp to also have an ADU, but perhaps there is more needed. Thank you, Lew

  6. asya says

    I’m in the process of getting a fha loan and one of the conditions in my loan is that I remove the burglar bars before closing..but my property is a foreclosure and it’s as is and the seller doesn’t want to give me permission to remove them because they dnt want the property to be vandalive and by it still being there property since it would be before closing they would be responsible for any damage. Can my lender change it and just have me do it after closing? I really dnt want to give up the property and the seller will not give me anymore extensions..what can I do?? Thanks in advance

  7. Mendi says

    Question: We’re currently in the process of purchasing a home with an FHA loan. During the appraisal, the sellers were told that the 40X80 metal pole building (that was very recently used for a car repair business) added no value to the property. The seller just had the property appraised 5 yrs ago for refinancing, and that same building was given a value of $35000. How could it suddenly have no value?
    We’re worried about the home appraising below asking price and not being able to get financing.

    • Dan Connolly says

      I would appeal the appraisal through your mortgage company if the value comes in below the agreed upon price. It would seem that unless it was built without a permit or in a way that violated building code or neighborhood restrictions that it should have value. One thing I always want to point out is that I am an real estate agent, not an appraiser. My opinion comes from 28 years of selling real estate, not from any appraisal background.

  8. Joanell says

    I have a question. I am getting a FHA loan and I am near closing I had one appraisal that said it required a final appraisal because although it 99% complete (this is a new construction) the water was not on during the appraisal. The real estate agent is saying that the steps in the house have to be stained for the final appraisal to be completed is that true?

    • Dan Connolly says

      I would assume it probably is true. I would have no way of knowing. The appraiser will normally provide condition that have to be corrected for the final appraisal. Sounds like that was one of them.

      • Joanell says

        Ok, thank you. I just didn’t think that an appraisal was based on if the steps were painted. More so that the steps were safe and had handrails.

  9. says

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  10. Zachary Payne says

    Hi! I have a question or two. I’m looking to buy a home and am currently in the process of my USDA loan approval.

    The home my family and I am looking to buy is a 1954. I live in Ohio if that makes any difference at all.

    It’s a foreclosure and is listed as a FHA sale atm.

    The home has a crack in the wall and a detached garage that has a janky door and chipped paint.

    Would any of this dequalify the home for USDA appraisal?



  11. Jane says

    Is it likely that a non-conforming bedroom with the dry wall taken out on half of two walls would be basis to fail an inspection?

    • Dan Connolly says

      Normally unfinished walls would be a problem on an FHA appraisal. When you say non-conforming bedroom what do you mean?

  12. Manny says

    Were are in the process of buying a home with a FHA loan. WE are at the stage before closing, however the AC is not working. My loan officer says the loan wont close until it get fix. I don’t want to invest $$ into the home if it technically isnt mine. To buy 2 new ACs for 4k is alot of $$ when the house isnt yours

  13. Christina says

    Our offer on a HUD home was just accepted. We are getting an FHA 203b loan. $3,300 required escrow for flooring as it has mostly been ripped out. Question — We can get the flooring at factory cost because husband works for the manufacturer. We were told that after closing, the flooring can be installed and it will be re-inspected and signed off on. Only then will we be reimbursed up to $3,300.00. How do we know who is an “approved installer”? We can get the “handy man” who is going to do some other work (paint, drywall repair, trim, refinish cabinets, etc.) do the flooring? We certainly don’t want to risk not getting reimbursed for the flooring by not jumping through HUD’s hoops.

    • Dan Connolly says

      That is a question for the lender who is giving you the 203B loan. As I understand it they will not reimburse you, but will pay the installer directly. But don’t take my word for it, the HUD approved lender has an inspector on their staff who will answer that question.

  14. Kelly Woods says

    Hello Dan, We are inquiring about a situation with a home we are trying to sell. It has a 1974 modular frame under it bolted upon a standard house foundation such as a full footer by code with the standard concrete block foundation, with all pillars set in place just as if it were a 2×12 stick built frame on a regular house. All exterior walls are 2×4 construction, the same as a regular built house and full brick exterior. The roof is all new truss built on a 7/12 pitch. The problem is that the local realtors are saying it doesnt qualify for a fha loan due to steel foundation. There are no hud tags on the frame because it was built in 1974. We had several people want to buy the home because it was totally renovated inside like a brand new home. They loved the house but couldnt get the loan because of the steel frame. We know about the conventional approach but alot of people just dont have the money to put down on it. We contacted fha about this problem and they said they didnt know why it wouldnt be approved by fha, only maybe our state that we live in has different criteria to loan on it. How can we correct this problem as the house is pretty much new inside and out? your response in this matter will be greatly appreciated and hopefully you may know of a way to fix this problem. thank you. Also tax records state it is a home dwelling.
    Mr and Mrs Woods

    • Dan Connolly says

      Well, I am not sure about this one either. What state do you live in? As I understand it, (being a Realtor, not an appraiser) HUD guidelines are in place for lenders to use as guidelines, not hard and fast rules. I would interview different lenders and try to find the ones that are set up to do the HUD 203K loans. These loans are for people who want to renovate property. My thinking is that they would have inspectors on their staff who would know the rules for what will fly in construction methods with FHA loans. I have seen a lot of properties over the years that have steel beams somewhere in the foundation and have never had anyone make an issue out of it. Inspectors seem to think it’s better. My approach would be to find a lender who doesn’t have a problem with it so you can provide that to the buyers. How many Realtors have told you this? Are they all part of the same company?

  15. Alliyson says

    Should I have an FHA apprasail done before I sign a contract with a VA loan?

    Thank you,


    • Dan Connolly says

      Well I wouldn’t. You will have to get a VA appraisal in order to get a VA loan so why not just go with that?

  16. Jen M says

    My husband and I are currently under contract for a HUD home in our area. We have been working with our lender trying to get approved for a 203b fha loan. The listing price of the home was $40,000. We bid $50,000 as homes in our preferred school district are selling very quickly and this is literally the only one in the district we want that is in our price range. Today our lender told us that they would not be doing their own appraisal and she could not finance us for more than the HUD listing price. This seems a little odd to me. Have you ever heard of this? We appreciate any advice.

    • Dan Connolly says

      HUD requires that you pay cash for the difference between the listed (appraised) price and what you bid over the list price. Your only other option that I know of would be to get a conventional loan for the property. If you qualify for 5% or 10% down conventional and the property appraises for the contract price, then that might be an option.

  17. says

    Dan let me try this again I bought a sfhglp insured by usda. The appraiser was surposed to inspect the home by the hud hand books,4150.2 4905.1 -The realtor called
    and had made an appointment for a home inspection and told me what time. I told her I wanted to be there she then told me to give the home inspector 1 hour to set up. When I pulled in the HI left not saying a word. I then recieved an email sent to her and forwarded to me that the HI was fine. the appraisal came back fine. The realtor put the HI on my closing cost. I had a roof inspection by two different roofer and the roof needed replaced. called the realtor and went nutz. she called the listing agent and worked out a deal on roof and assured me they were not going to hurt me! I tried to get out of deal through emails I have. I paid for the roof inspections and she added that to my closing costs. (and there is lots more) The home inspector was a realtor– when I called the dbpr she said that man is not a home inspector hes a inactive realtor. I did not find that out till after I bought the home. I moved in and everthing that could happen to a person has happened to me. I called and got a certified home inspection and it was unbelievable. 28 yr old everything.I have had no furnace or air, electric all bad,toilets broken termites and rodents, appliances were not working or shot fire.I paid 160,000 for this place. I have put 28,000 trying to clean it up and have lived in one room because I bought a small air conditioner so I could sleep. The air handler was rusted out I could see the living room from the attic. That all cought fire. Both of the reports said it was all ok. I have filed a complaint with the DBPR on the realtor,that has been forwared to the law dept. what about the appraiser, the home inspector and the mortage co? If one person would of told the truth I would not be in these shoes today. By the way I am a widow. This home should of been sold to a handy man . Thanks Dan

    • Dan Connolly says

      Well it is always awful to hear about things like this. The only thing I can suggest is to hire an attorney. I do not know what the DBPR is, but I am assuming it is the regulatory body for Realtors in your state. I would keep all emails and document all of the happenings and talk to an attorney about this. Good luck! I am so sorry that this happened to you, it is a terrible situation.

  18. says

    Dear Dan I bought a home from usda and the appraiser was not a fha roster appraiser
    The furnace air hotwater tank most of the electric was all bad. Gutters were broken and floods the back of the home. swimming pool tiles all fell off, applainces were 27 yrs old. so was the furnace and air. roof had no flashing, termites and rodents in attic.
    On top of this the realtor hires another realtor to do the home inspection. Both said the home was in above average condition. The disclosure papers were filled out by the children that knew nothing about the home and were signed by an out of state attorney.The owners were in a nursing home with alzhiemers. I’m in 81,000 in estimates to repair all the damage. Thanks ruth

    • Dan Connolly says

      Ruth, I am confused. You would only get an FHA appraiser if you were buying the home with an FHA insured loan. Was that the case? The inspection issues are also confusing. Did you find out the issues during your inspection contingency period? I could imagine that a home could need all those things and if it was priced accordingly it may still be what some would call a good deal. Some of those things sound like they would have been obvious at first look. If the inspector did not point out those things you may have some recourse. The paperwork that came with the inspection should address that issue. As far as the fact that the inspector was also a Realtor is also confusing. Was he a certified inspector as well? Who paid for the inspection?

  19. Laura Tiller says

    Me & my husband got pre approved for a FHA loan. The market value on the home is 250,000 and its a repo home. The selling bank is only asking 128000. Now I am being told by my real estate agent’s manager that the home will not qualify because the out building/garage on the property is valued to high. It is a very expensive garage that someone must have worked on cars in. But could the value being too high effect the loan? Just doesn’t make since? If we failed to pay, they could resale the property for more than the loan.

    • Dan Connolly says

      There are several things about this that I don’t understand. It would be impossible for me to make any kind of accurate statement without a lot more info. You should work with a Realtor that you trust and let them explain it to you.

  20. Lena says

    After extensive research, I am still unable to find my answer. In regards to bedroom closets; didn’t FHA at one point in time require bedrooms to have closets in order to be considered a bedroom? Someone mentioned somewhere, that was the case but then the requirement was removed sometime in 1993. International Building Code does not note that requirement, neither does VA. If it is a requirement, could you cite a source?

    • Dan Connolly says

      I want to always start my answers that I am not affiliated with FHA, I am a Realtor in GA. I do not know of an FHA requirement for a certain number of bedrooms in a house to qualify for an FHA loan. I have seen people get FHA loans on homes that only have one bedroom. If you are in the section 8 rental business which is regulated by HUD they want bedrooms to have closets and windows to be considered as bedrooms since they pay more for extra bedrooms.

  21. Pamala Porter says

    Just trying to buy my first home by myself. I am in a Lease to Purchase. Been in the house for 14 months. Going with HUD. Home inspection was done 9/6. There is mold under the home, 10′ sheetrock wall in bedroom was wet and buckling, been wet for 14+ months, we are sure it has mold behind the sheetrock now. Not sure yet if dangerous mold yet, had mold allergies before and had to take shots. Those headaches are coming back and no wonder they were. I sleep close to the bad wall. Will I have to purchase this home still? Owner finally admitted it had mold before, and a cracked rafter. I will lose my $7,800 if I don’t buy, but I feel I will be the one punished when I try to resell it.

    • Dan Connolly says

      Well it is not possible for me to give you the answers you are looking for. There are different laws depending on what state you are in. I am not an attorney, I am a real estate agent in Georgia. But I would suggest that you show the contract to an attorney and see what your options are. Here in GA, there would be some issues if the owner had not disclosed a potential hazard like the home having mold before, but even here I would be suggesting that you get an attorney. Good luck!

  22. Kevin Stahl says

    my girlfriend and I are in the process of buying a home via FHA we has inspection yesterday and there were some issues found ( mosty easy fix stuff ) but there was foundation issues ( needs sealed properly ) on the addition on the back of the house and there was a spot on the roof of the addition that needs repair , we are having these issues looked at tomorrow and getting estimates done … when estimates come back we are going to ask the bank to pay for the work , but i am afraid they will say no … am in need of advise … we really want this place … can we find a way to pay to have the issues taken care of before close ( next month ) and be ok …? after we get estimates for the work we will schedule and appraisal ( FHA )

    • Dan Connolly says

      When you say ask the bank to pay for the work, I am assuming the bank is the seller because the home is a foreclosure? If so, I doubt that they will repair or allow you to repair before closing. You can try. The appraiser may not flag these items and you then wouldn’t be required to repair unless the inspection becomes part of the contract and the underwriters pick up on it and ask for the repairs. The FHA has a loan that will let you borrow the money for repairs and have them completed after closing. It is a 203K loan. If the appraiser or underwriters require the repair that could potentially be a solution, to offer to switch to a 203K loan and do the repairs under the lender’s watchful eye after closing.

      • Kevin Stahl says

        Mr. Connolly thanks for responding so soon , and sorry for not getting back quicker … the appraisal just came back for the house , and we could not be more happy … nothing needs to be fixed … so we are very pleased

        looks like we are on track to move forward

        thanks for your insight

  23. Ryan Akens says

    I just put an offer in on a foreclosed home. The fascia and soffet on the rear of the house is missing in a small area, 2 foot or so. In my offer I put that I would make repairs but they denied it for liability reasons. Do you think if I take it out that the fha appraiser would say no to it?

    • Dan Connolly says

      I think it is likely that the appraiser will have an issue with it if there is a gap in the facia and soffit. Sometimes they seem to look the other way, but in general in my experience they do not like gaps in the exterior.

  24. says

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  25. susan s says

    dan I purchased a home back in 06. which finding has lead paint, Do i have any rights to contact the seller or loan underwriters? are their any time limits?
    Correcting the probelm is a hefty cost these days.
    Any advise? thanks s

    • Dan Connolly says

      First I am sorry it has taken so long to reply. I have had some health challanges this summer that had me out of commission for a couple of months. I would think that you don’t have much recourse on the underwriters. Did you have a lead based paint exhibit in your contract. It is a form which warns you about the possibility of it and offers you the option of testing for it or waiving the right to test. Laws vary from state to state so it would depend on where you are. Check with an attorney!

  26. Lucy says

    My agent told me that we are approved for an FHA loan. We had the inspection and appraisal done. The appraisal is okey for the price of the house and also meet the minimum requirements of an FHA loan how ever there is a notation that garage was used as rec room that needs to be restored to its original use and unpermitted bathroom on the masters bedroom. Will the lender not approved the loan because of this.

    • Dan Connolly says

      I have heard of lenders not approving FHA loans for this reason. More with the garage conversion to a family room than with an unpermitted bathroom, but I would not be surprised by either. I think that the guidelines are not written in stone and different lenders will have different degrees that they stick to the guidelines. Unfortunately you have to wait and see.

  27. Cindy says

    My son is looking at condos/townhomes from 2006-2009. He was told by the realtor FHA does not do loans on condos/townhomes is this true? How many 1st time home buyers have $25,000.-$45,000. to put down for a conv. loan.


    • Dan Connolly says

      Some condo/townhome complexes are approved for FHA loans. They used to do spot approvals on any condo but now the complex has to be already approved. Go to HUD’s list and put in the zip code ( The website is only active during normal business hours (not on nights or weekends). Make sure you look to the end of the column when looking at a complex. It may say approved in the middle and then expired at the end of the column.

  28. Ashley A. says

    My husband and I are considering going under contract on a home that is foreclosed with BOA. They have countered us, we need only accept their counter to go ‘under contract’. Our worries are that we are doing a USDA loan or FHA if we absolutely have to and there may be some issues that keep our loan from going through. The first is that there are multiple doors with “doogie doors” cut and installed into them. The second is that there is an unfinished basement, the basement is attached to the garage and there are some vents that they cut into the garage that go into rooms of the unfinished basement that are open to the rooms, like they were going to install an AC unit in the garage, but didn’t get to it. What do you think USDA/FHA will think of that?

    • Dan Connolly says

      I am sorry this took awhile, we were out of town for a week. This may be too late. I am not sure how the USDA reacts to anything, I have never done a sale with them providing financing. I think the FHA may want the holes repaired before closing, but may not. I don’t think it would be too difficult. I have never had an issue with doggie doors.

  29. Donna Wilde says

    We are buying a home through a FHA loan. We had a appraisal which stated things that had to be fixed before closing. We fixed all of the requirements and the appraiser went back out to check to make sure we fulfilled those requirements, I just got back his report and saw that he added more things he wants fixed? Is he allowed to go back through and add things we only have 9 days tell closing help!!!

    • Dan Connolly says

      Unfortunately I went out of town and the person answering my calls and emails did not get the access code to my blog so blog posts were left unanswered. This may be too late, but the repairs required by the appraiser will generally have to be addressed regardless of when he finds them. It’s frustrating, I know, you may be able to appeal this to the appraiser, but I don’t think that he will change his mind.

  30. idaholady says

    Hello, i was just wondering after the FHA appraisal does that money i paid the bank for the apprasial do i get that back ? I live in Idaho & qualify for the FHA loan. Thank You hope you will answer

    • Dan Connolly says

      Well it depends, are you refinancing or is this a purchase. If you are refinancing, it is one of the costs of the transaction that is not refundable. If you are purchasing, it could possibly be paid by the seller if they agreed to pay closing costs and then would be a credit on the settlement statement which would mean you would bring that much less to the closing. But it would depend on the contract and how it was written.

  31. Tiffany Laubach says


    My husband and I are trying to refinance our home. When we bought our home we paid cash for it. We have been in it almost 3 years now. We took out a first mortgage in july of 2011 but our interest is high. We are trying to refinance it at a lower percentage rate. However the company we are going through is an fha approved lender. The appraisers came out today and did the appraisal. They noted that there is siding missing as well as some outlet covers missing that we may not get approved. I showed them I have the outlet covers and was putting them on when they were here. Could these minor things keep us from getting approved. We plan to do the siding with the money that we get it is only 8square of siding. Thanks so much

    • Dan Connolly says

      Well they probably won’t just reject the loan for the repairs but they might require the repairs to be complete before closing. This will involve the appraiser coming back to make sure the work is complete before closing and there will probably be a charge for the second trip (maybe in the $75 range, different with various lenders). You may have to find a way to do the siding repair before the closing. Is 8 square feet or 8 squares (10×10) which is 800 square feet?

  32. Dan Connolly says

    The appraiser will have to make that call. I wouldn’t think that would be an issue as long as the water was not draining back into the house but we never really know what and appraiser will come up with.

  33. Erich says

    I am currently trying to purchase an “as is” foreclosed home. We are wating for the FHA appraisal to happen. We know of one issue with the sump pump. The pump works and is draining water, but the water is not draining far enough away from the house. The drain from the sump pump is not connected to the “french drain” outside of the house. It looks like the connection broke. We are worried that the FHA appraiser will require it to be fixed by the bank prior to close, but the bank may not because of it being an “as is” sale. I know in the FHA guidelines on sump pump is the pump must be functional and operational. The pump does work and is draining water, but its recycling the water it pushes out. Will this hamper our approval of the FHA loan?

  34. Jessica says


    I recently put down an offer for a house that was bank owned by BOA. BOA accepted my offer and we are moving along in the process. We had our inspection done yesteday, and the inspector came back and notified us that not only was the roof in poor condition, but also there were small signs of mold in the basement and the water heater needed to be replaced. We informed our realtor of this issue and he seemed to think it was going to be a huge problem considering we are taking out an FHA ARM loan. However, after speaking with our mortgage broker, he seems to think that when we sound out the actual appraiser, he will go back to the bank to inform them that this house cannot be FHA approved unless these repairs are made and that sometimes the bank will fix these issues (even on foreclosures) because they want to get rid of the house. How does this typically work? Is the bank responsible for getting the house in shape to be approved for an FHA loan? or will we need to make the improvements ourselves? And if that’s the case, how does this work? Do we repair the roof ourselves and replace the water heater then get the house appraised again? Sorry for all of these questions but I am curious to hear your thoughts.



    • Dan Connolly says

      The bank is not responsible for repairs but I think that more and more they are doing some repair to get the house sold. It is definitely worth a shot. Another option would be to switch to an FHA 203K loan which would let you finance the repairs. Only some FHA lenders do these type of loans and the downside is that the interest rate may be a bit higher.

  35. Dan Connolly says

    FHA doesn’t want to make loans on houses that need work. The way around it is to get an FHA 203K loan that will finance the repairs. The lenders who do those loans have someone who comes out and monitors that the work is being done correctly and cuts checks to the contractors as they complete the various phases. They oversee the jobs and make sure that the contractors are licensed and insured etc.

    The reason is because there are lots of foreclosures out there where the homeowner took on a job that turned out to me harder and more expensive than they thought, they couldn’t finish and the lender gets the property back with work half completed.

  36. Angela says

    This is all freaking me out. We just applied for an FHA loan on a house that we plan to renovate–new floors, appliances, electrical, paint and/or replace dry wall (this is a pre-1978 house). Why does all this have to be done before the mortgage is approved?

  37. Dean says

    I am purchasing a home with a USDA loan. The house is in excellent condition however one of the 2 AC units appears to not be working. Also the electric water heater needs to be replaced. The carpets are stained but no holes or tears. Also there are some drywall patches on the walls that are not painted where they patched some scratches. The home is a forecloser being sold as is. Will I need to repair any of these prior to closing on the loan or can I do it afterwards or do they require estimates and tie it into the loan? Also which ones do I even need to be concerned with? Also all the windows are in great condition and open, close, and lock but a few are missing screens. I just want to know what to expect. I will have some extra money in a few weeks to make some of these repairs if needed, but the AC unit worries me as I don’t know if it needs to be repaired or replaced. Or am I ok because one of the 2 units works? They are on separate thermostats.

    • Dan Connolly says

      I am sorry, normally I get an email when someone posts on my website but that function quit working and suddenly I realized that I had unanswered posts.

      It may be too late for this, but you can get a 203K loan to address repairs, if the appraiser requires them. Stained carpet probably won’t be an issue unless it is really terrible or mold. Typically they don’t test AC in the winter if the temp is below 50, so that might not be an issue. Some lenders ask for the inspection, so it may come up, then you can go to a 203K.

  38. Dave says

    My daughter bought her condo 2 years ago to date, her furnace broke down. She bought under a fha loan, is there provisions that require that the furnace should been in working condition for longer then this?

    • Dan Connolly says

      FHA loans do not have a provision for HVAC systems to work for any amount of time past closing. The appraiser checks to make sure that it is working at the time of the appraisal, but FHA does not offer any warranty on anything. There are independent warranty companies which will warrant the mechanical systems in your home, for a fee, but once the furnace has broken down it is too late for the third party warranties.

  39. Cole says

    We currently have an accepted offer on a Fannie Mae home. Sometime between when we made out initial offer and our accepted counter, Fannie had the carpets removed from the home. We planned on replacing the filthy carpets anyway, but now it is being suggested that without them, it will not be eligible for an FHA loan. Now that there is only bare subflooring and concrete, will the home qualify for an FHA loan anymore? If not, what is the likelihood that we could negotiate carpet replacement with Fannie Mae if it is a lender requirement and they removed it after our initial offer? Any input would be appreciated. Thanks so much!

    • Dan Connolly says

      Sorry that I missed this post when it came through! I may be too late on this, but I would try to get them to replace it. You may be able to go with a HomePath renovation loan and get the carpet replaced, and the cost added to the loan, if they refuse. There are some benefits to the Homepath product. The rates can be competitive with FHA, they have similar down payments, but Home Path does not have MIP (mortgage insurance).

  40. Stephen D Bouche says

    I need to leave a comment your statement (FHA appraisers do a different type of appraisal than appraisers for conventional loans. They are more concerned with the health and safety of the borrowers. They look at the standard things that all appraisers look at, and they take it a little further. FHA is not only concerned with the property value but is also concerned with things like handrails on steps, broken windows, lack of screens, evidence of rodent infestation and other issues that don’t affect a normal appraisal to the same degree.)
    These are No longer valid HUD /FHA issues, read the Letter December 19, 2005
    MORTGAGEE LETTER 2005-ML-48 changes the hud hand book 4150
    The appraisers and underwriters should read see

    • Eric says

      I have another question related to FHA loans. I have listed my home and accepted an offer from a buyer approved for an FHA loan. The buyer wanted to have the home appraised prior to an inspection, which I agreed to through my realtor’s purchase agreement. The bank scheduled the appraisal, the appraisal was conducted, and the results came back so that the home was appraised higher than the asking price. When that information came back to the bank, however, the bank admitted that they made a mistake and had a conventional loan appraisal done, and not one for FHA. The appraiser who did the appraisal did not do FHA appraisals and now the appraisal is not acceptable. My concern is, obviously, that another appraisal will be done by an FHA approved appraiser, and will not appraise for as high as the one just done. Is there any recourse if I lose the sale as a result of the mistake the bank made?

      • Dan Connolly says

        In my opinion you probably wouldn’t. The offer is contingent on an the buyer getting an FHA loan and the standard forms protects the Buyer from any loss if the property does not appraise (by an FHA approved appraiser), right up to the closing. It depends on whether you used the standard forms, of course and my opinion is just that… I don’t really see why you would have recourse, unless you paid for the first appraisal, and then perhaps you could get your money back.

  41. Mel says

    I’m a little nervous reading this. I am in MA and am in negotiations for a short sale home.
    We had an inspection already, and saw some mouse/rat droppings (noticed rodent infestation) but he said because nobody is in the house they aren’t scared away.
    More importantly, the roof is old but we were told we could probably get a few more years out of it. It’s not bad but yes it’s old.
    Also, there are NO appliances in the kitchen– only a dish washer.
    Also a few windows are non functioning, such as, 2 are broken, all the basement ones are boarded up, and a few windows are calked closed.
    Did we waste our time with this property? Because we had no idea FHA had such guidelines until now.
    However, the realtor helping us said that she has seen a property just like that get approved for FHA… could that really be so?
    Other than the roof, we plan to replace windows and add appliances before even sleeping in that house.

    • Dan Connolly says

      Well it will be up to the appraiser. I have seen them overlook cracked windows but not broken windows. You might want to sweep up the rodent droppings before the appraiser gets there. There does not seem to be a uniform standard that they follow. I have seen some homes come back with required repairs and others not. A stove has been required on many appraisals I have been involved with. If there is a space for a dishwasher, you have to have one.

      At the end of the day, they will come back with required repairs and if they are done before closing, that will be sufficient.

  42. suzane says

    This was a contract using an FHA loan and the appraisal was 260,000. The contract fell through because they wanted me to fix the roof. Since they wanted me to lower my house by 18,000, I decided to get out of the contract by not fixing the roof and fixing it later for a better buyer.
    .-= suzane ´s last blog ..Cheap Young Driver Insurance =-.

  43. says

    Been approved for FHA mortgage. Appraisal came in at 150k. Banks are saying the appraisal is unacceptable. The appraisal report has 30 to 32% adjustments on it. The purchase property has 7.45acres. The appraisaer had to make adjustments due to really not having any comps that were similar in the area. Property sat on market for about year and half, price was dropped before my offer. advice from LO to ask sellers for reduction in price to 130k ,which is were the comps are in range at. Comp1 125,000 1.21 acres appx Comp2 115,oo 0.33 acre appx Comp3 110,000 3.72 acres appx? Is this property over priced? Should I have to pay for another appraisal or should sellers and thier listing agent, to prove value?

  44. says

    I live in South Carolina and I am trying to purchase a home. The home it self was $127,000. I went in at 125,000 and the seller agreed with the deal. I also got an insprection and all the necessary things in order to purchase the home. I just found out that the lender appreaised the house at 140,000 and the deal feel through. I was told(not by her) but the reailter she said that is over the amount of the FHA guidelines. I want to know if this is so. The reason I was asking was because during the process of waiting I would call her with general questions and she would never returned my calls. I have started the process ever since April and I have called her may have called her about 10 times with questions and she has only called me back once. I was able to talk with her another time and that’s only because she answered the line I called. She called me this past week to get my go-ahead on a situration regaurding the house and I just found out this week that it feel through. I am confused because she went to see and inspect the house in May, so I am pretty sure she had an idea of what it was going to be appraised for but she did not call me. My realtors also have a hard time getting in contact with her. I am also confused as to why she did not contact me about the appraisal.

  45. aaron says

    Dan, We had a FHA appraisal done two weeks ago and are only a week away from our agreed closing date. When ever we call they say it didnt come yet and they don’t know why and they leave it at that. How do i force the issue with out getting shoved on the back of the stack. Ever thing else to that point has been completed with no problems. Please help.

  46. Barbara Lynn says

    I had an appraisal done 3 years ago and got a loan from the Government. The guy came from Landsafe and finally saw his report. He makes false statements about the basement (where he refused to go) and how to get into it. He never looked at the attic so he had no way of seeing the condition of the roof which had to be replaced immediately. A guy came to inspect my well, did not inspect it. Appraiser said he did not end him and told me not necessary because “well water is better then city water.” I should have simply cancelled the application for the loan. I needed it to keep my home (HECM loan) and had no place to go. I took out the equity to fix the house but only had $25K to work with. The home was valued at $225. I paid off $88K that I owed and the bank kept the rest. The bank that is now involved is not the original one that gave me the loan but that is odd because the bank I have now already owned the old bank. I have lots of questions about my inspector, about why he did not care about 1967 heater, 1926 windows, a 1926 roof that had to be replaced, plaster damage in ceilings due to leaks, lead paint, 1957 applicances, and gas applicances vented into a working fire place. Lead soldier on pipes, bad electrical service. I used up my savings and equity to try and fix these things because I was told by broker once they were fixed, I could have my home reappraised and it would be worth more. I hear the bank owns the company that sent the appraiser and the contract I have states that my house was in perfect condition. Be careful when you get a HECM because Senior Citizens are like dead pray on the road while the vultures circle above. In the end, with the bank doing bad things to make my life very hard — like paying taxes not due and then harrassing me, taking money I send them and giving it to HUD for mortgage insurance which was already pre-paid at time of loan, the nightmare goes on and I cannot take it any more.

  47. says

    My husband and I are trying to buy a house there are some things were not sure of. Does anyone know if waterproofing the basement is a USDA requirement? We will get it done after we get the house but we cant buy unless its approved.
    Thank You!

  48. kenny brandt says

    I’m a broker in the New Orleans area. I was moved by your problem. How’s it going? I dont have any specific help for you, but what do you mean by “they did their own appraisal”? Are they buying with cash and did not need an appraisal?? Im confused as to what that means. Obviously, if the sale was contingent upon an appraisal, and they were borrowing any money at all, it would be appraised by a lender’s order and not ordered by the buyer.
    If they are buying with cash and made the contract contingent upon appraisal, then ordered their own, then yes, this is extremely fishy. But i think you could have smelled that fish before signing.
    It might not be too late to insist on a randomly selected appraiser from the pool. Is this involving an agent? or By owner?
    I wish you the very best. Hope it works out. Let us know how it’s going.

  49. Dan Connolly says

    Is this also an FHA loan? What did you mean by a private appraisal?

    Sometimes you can appeal the appraisal, send the first appraisal to the manager of the second company. In order to appeal, the buyer usually has to be on board though, since its their appraisal that you are appealing.

    How the contract was written will dictate how the appraisal is handled. If you have the right to contest it or get another appraisal to replace it, it would be spelled out. Otherwise you have to appeal to the good graces of the other party. Don’t let them know you have a deposit on a purchase at stake.

    Do you have an agent representing you in this? How did you get non refundable earnest money on your next purchase before your current home sale closed?

    • Dan Connolly says

      The other point that I should have made in my last comment is that the FHA has a requirement that the property appraise for the full sales price or that the buyer not be required to close (and not suffer any penalty), so the 260K appraisal would not have helped you in a 280K sale anyhow. I have heard that that 6 month rule has been relaxed to 90 days, but I am not sure if that passed across the entire country. As usual I have to point out that I am not an FHA appraiser or lender, I am a Realtor expressing only an opinion. No warranties expressed or implied.

  50. Rinne says

    I had a contract with a person I was selling my home to in December 2010. This was a contract using an FHA loan and the appraisal was 260,000. The contract fell through because they wanted me to fix the roof. Since they wanted me to lower my house by 18,000, I decided to get out of the contract by not fixing the roof and fixing it later for a better buyer.

    So, now the roof is fixed and the kitchen completely renovated (granite, ceramic floors, new maple cabs) and I have a new buyer that will pay my asking price of 280,000. they did their own appraisal, and it was appraised under the value of short sales in the neighborhood. It now appraised for 225,000????? I have been in homes that were deplorable and sold for higher.

    At this point, I think something fishy is going on. Is it not true that the first appraisal that was done less than 6 months ago has to be used and these buyers are obligated to buy my house. The only contingency for this deal was the appraisal.

    Please help. I have a 15,000 deposit on a new home that is being built and we close in less that 7 weeks and I wont get my deposit back if we don’t close.

    Thank you so very much.

  51. Nykki Rodriguez says

    Mr. Connolly,

    My husband and I are interested in a home and made an offer for 325,000 it was on the market at 349,900. My main concern is that zillow states the value at 244, ooo. The owner has put in a lot of work new roof, siding , garage doors, but it is an FHA loan that we are gooing with. If the FHA appraisal comes in at less than the agreed price do this still give us the loan for the agreed price.

    • Dan Connolly says

      FHA requires that the home appraise for the sales price. The only way around this would be if you put 3.5% of the appraised value down PLUS the difference between the appraised value and the sales price. (This is not guaranteed it would have to be confirmed by your lender. FHA issues minimum guidelines, it is up to the lender if they go with the minimums or they take a more conservative approach)

      Zillow’s values are frequently off. If you are working with an agent you could get him to do a market analysis and see if he can find comparable sales within the last 6 months that support the price.

  52. J. Johnson says

    My husband and I have been pre-approved for an FHA Loan. We have recently found a home that we are interested in, however, after talking to the real estate agent, it turns out that the master bedroom was an addition that was never ‘permitted’. Will this prevent us from putting in an offer and ultimately purchasing this home with an FHA Loan? Thank you for any information.


    • Dan Connolly says

      I think that is likely not to be approved if the non-permitted addition is disclosed and the disclosure is a part of the contract, but it would be up to the appraiser. There is a chance it would go through but it is not likely. This is my opinion only, you might check with an appraiser that the lender uses and see if an inspection by a structural engineer possibly would affect the decision.

  53. Terry says

    Mr. Connelly, the appraisal for the completely renovated/upgraded house I am selling (listed for $149k and have contract for $145k) just appraised for $106k. The appraiser is out of the area and is using only foreclosures when there are many others that can be used. Also, he is using houses in other neighborhoods that are not even remotely comparable. What is the process to contest an appraisal? And, someone said that this low-ball appraisal will stay with the property for six months. Is this true? If so, where is that info housed? Thank you in advance.

  54. E Davis says

    Mr. Connolly,
    I came across your Q/A pages while trying to prepare for an FHA appraisal to obtain a reverse mortgage. Everything was in place waiting for the appraisal. The man came and we enjoyed a chat after his job was finished (about 30min) during which time I left him to do his job. I felt very positive about the experience after he left. I then received a call from the lender several days later who admitted to being completely confused about the information he had received from the appraiser. He said that he could not find a comparable so he could not do the appraisal. I was stunned of course. I thought an appraiser was trained to appraise property/dwellings and not just copy numbers from a similar property. I would so appreciate your opinion. Thank you.

  55. Stacy says

    We are in the process of buying and FHA home with a 203K. So the house needs some work. My question is with FHA guidelines does it require a kitchen floor and the counter top is there which is brand new but it is not fasten down will Fha require this also. The shower in one of the bathrooms has mold in it the contractor says we have to replace this, can’t this just be cleaned up to pass. We are redewing the hole house once we close. All we want is the basic stuff done to pass inspection with minimal amount of money used because we are going to tear it all apart. My lender keeps saying that he reccommends using all the money we have available for renovations. Fha does not require paint on the walls do they ? If you could help with these question I would be grateful.

    • Dan Connolly says

      I start every answer the same way. I am not an appraiser, I am a Realtor. My experience is that the FHA has guidelines more than requirements. The various lenders have minimum requirements but they can ask for more if they choose. The contractor wouldn’t be the one to decide what the FHA will approve. The inspector from the lender will be the one who would let you know if the shower needs to be replaced. As I understand it (no guarantees here) if there is money left over you can pay the loan balance down. Generally, in my experience, they haven’t been willing to approve raw sheetrock, they want paint on it, but again it is up to the discretion of the lender and their representative how much you have to do.

  56. Michele says

    Can you clarify if there have been any changes to appraisals for “below grade” and “lower level” rooms in Massachusetts? We have a sloping lot, with a complete 2 story addition at grade level. The 1st floor has a separate entrance and there is no access to the existing basement. In 2005, the lower level square footage was included in the GLA. It is a finished bedroom with heat, picture window, and has 3 fully above grade exterior walls. We are questioning why it is considered “below grade finished basement room” in the 2011 appraisal?

    • Dan Connolly says

      Michelle, Well I always want to start with the disclaimer that I am a Realtor in Atlanta GA and am not an appraiser. The way it has been treated here over the last couple of years, in my experience, is that if any of the four walls are below grade then it is treated as below grade square footage. In 2005 there were a lot of things that appraisers were doing that are no longer acceptable. Back then the rule was there, but appraisers had more latitude to ignore some of the rules. I don’t think that there was any actual written authority back then to ignore guidelines, but there was much less review of appraisals. You should get some value for the finished lower level but not at the same rate as the main floor per square foot. Your best bet is to look for comps with similar floorplans that support your price, and offer them to the appraiser if they support the value you are looking for.

  57. Nigel says

    My fiancee and I are looking to move to Colorado and found a great starter home listed. The home is described as being in good shape except for these issues. The main is that the home needs new septic tank. Then water lines need to be buried below the freeze line and home needs winterizing. So given these issues would the home be eligable for the 203K loan?

    • Dan Connolly says

      I would think that the home would be a candidate for a 203K loan. The thing to understand is the when the inspector from the lender comes out to see if the property they will look at everything and may require that anything else that needs to be done is complete. I always like to point out that I am a Realtor in Atlanta GA not an appriaser, so it’s all just my opinion.

  58. Marisa says

    How does an FHA appraiser and inspector look at and consider a house that is not tied to a city water system. Will they approve this? I am currently approved for an FHA loan but I am not sure how the FHA apprasial counts towards a home not tied into the city water cystem.

    • Dan Connolly says

      In general the rule is that if there is sewer in the street the house has to hook up to it and cannot be on septic. I would imagine that this would also apply to the water, but I have never come across that question. As I always like to point out, this info is the opinion of a Realtor, I am not an appraiser.

  59. Trina says


    Can anyone tell me where I can get some help. I just closed on a FHA loan on 01/21/11. My first mortgage payment is due on 03/01/11. I just received a letter last week that my homeowners insurance is cancelling due to the condition of my roof. I had a roofing contractor come out to find out what was going on and too my amazing the roof is in horrible condition. Without even going on to the roof , you can see several shingles missing and you can also see a large amount of wood where the shingle and the step paper is no longer there. I know that I did not get a home inspection, but this is a FHA loan. To my knowledge FHA is suppose to check electrical, air conditioning and heating, plumbing, foundation and roof. Clearly this was not checked. All damage to this roof is visable. On the appraisal the appraiser stated that the roof shingles was average. Which was untrue. The appraiser also made the statement that there is no warranty to the foundation, roof, electrical, slab and air conditiong and heating. I know the appraiser is not an expert and cant give a warranty on these things, but he is suppose to make sure they are working properly at the time of inspection. There has been no inclimate weather that would affect the roof. The condition of the roof today is the same as it was at the time of inspection. Is there anything that I can do? I do not have $6000 to replace a roof when this should have been documented by the appraiser. thanks

    • Dan Connolly says

      Hmm, I am not sure what you can do about this. I would show the paperwork to a local attorney. I think the laws governing this are state laws and would vary according to where you are.

  60. Jen says

    Hello, I am looking to buy a home with FHA financing. It was built long before 1978, so I know peeling paint is looked at by the appraiser. I saw one spot inside which I’ve requested to have scraped and painted. However, outside on the top of the second level, just under the roof, there is a bit of peeling paint. Will that really need to be repaired? Or is it o.k. if it is far out of reach? I would appreciate hearing your best guess. Thank you!

  61. Elizabeth says

    Getting ready to sell my house and have been thinking about the buyers and the likelihood that some of them will be financing with FHA mortgage. I have a one bedroom in-law apartment in the basement, it currently has hotplate and microwave and sink in its kitchen. Are FHA approved homes allowed to have in-law apartment and if so does the in-law apartment kitchen have to have built in stove-top? Thank you for all the great info on this site.

    • Dan Connolly says

      In-law suite means that it is not a legal duplex. So it would actually be not allowed to have a second kitchen in a single family house. I don’t think they would like to see a hotplate because that might make it look like a second kitchen.

      Is it leased? If it’s vacant and has inside access to the house, so it could be a part of the main house, I think you will have the least amount of trouble with FHA.

  62. deenie says

    I am a 68 year old woman with severe arthritis and can no longer work. I have applied for jobs but no one wants to hire me since there are so many younger people in the workforce looking for work and they are better equipped physically. I purchased a 425 sq. ft. A-frame cabin 8 years ago in a recreational property subdivision on a real estate contract. It had no kitchen and no bathroom and was just one large room with a sleeping loft. Since that time, I have added a full kitchen, bath and dining room (approximately 200 more square feet). I applied for an FHA refinance since I am now retired and wanted to pay off all my debts so I would have just one payment. My only source of income now is social security and I purchased this home and remodeled it so I could afford it when I retired. I just found out that the home was never permitted, my remodeler did not get any permits and installed the septic field and plumbing without a permit. Since I was ignorant of what was required for remodeling, I never thought to inquire if he had permits. I trusted he would do what needed to be done. I thought I was doing what was right by buying a small home and remodeling it so I could live comfortably in my old age. I had an electrician inspect the electric and he said it was in great shape. He did not ask me if it was permitted. I was denied an FHA loan as I had only a wood stove for heat (normal for the rural area I live in) and required me to put in a back up source of heat. That is not cost effective for me at this time since I spent all my savings on remodeling the home. I then applied for a reverse mortgage, but am afraid if they find out the home was never permitted, they will not allow that either. Now I cannot get a mortgage of any kind nor can I sell the home except on a real estate contract which will not give me what I need, a way to pay off all my debts. What can I do to remedy this situation without it costing me more than the house is worth? Thanks.

    • Dan Connolly says

      Well the first thing I would look at is the fact that the FHA loan required a backup heating system. Perhaps that may not be as expensive as you might think. There may be some incentives or programs, depending on where you live that may help you pay for a furnace. In a 425 square foot home some simple electric baseboard heat may be sufficient, and the FHA 203K program may let you finance the cost of the heat along with the rest of the loan. If that was the only reason they turned you down I would start there.

  63. Anonymous says

    Hello, i am trying to buy a home with a 203k loan. The home of course has some issue there is mold in the basement from sitting empty so long and a leak from the shower down there. Would they just do a tear out of the mold or would they want to replace it even though its in the basement. Also if the bank accepted our offer can we go in and do some repairs before the apprasial. Also there is tile in the basement some of its been grouted would they want it grouted?

    • Dan Connolly says

      These are questions for the bank you are getting the loan from. Normally they send a inspector from the bank to review the house and he makes the decision. There are guidelines for FHA 203K loans but the banks are not required to follow them to the letter. The bank can decide to be more stringent than the guidelines. The guidelines spell out the minimum requirements but the bank can be more conservative and ask for more.

  64. John Steward says

    I am in the process of getting an FHA appraisal for a new construction home. It is the second home of four to be completed. Each will have three acres. It has 2222 sq ft. Average sale in this area the past yr has been at least$90 sq ft for comparable sales. How can the appraisal come back at a value just over the sales price of $80 sq ft? Is this common? Area comps show this home should be at minimal $90 sq ft. Have the new regulations forced appraisers to cover their tails so to make the appraisals to represent just over the sales price rather than a homes true value?
    Any help would be appreciated.

    • Dan Connolly says

      I would appeal the appraisal. If the properties have been steadily declining then the appraiser may feel that the values will continue to go down. If the values have been steady at 90/sq’ I would think you could win an appeal.

  65. Derek says

    I’ve been looking at an apartment that has a rat infestation. Will I be able to use the 203k to fix this problem or would FHA not approve this property at all?

    • Dan Connolly says

      When you say apartment, do you mean a condo for sale, or a multi family building for sale? I would think 203K loans could be used for rat infestation, but it would be up to your lender to make the final decision.

  66. Danielle says

    Hi Dan, very frustrated right now with my FIRST home buy through FHA. It’s been 2 months now, everything is set to go, got the appraiser’s report back and he said that the washer sink in the basement has no drain pipe, that when turned on water just flows onto the floor. This is the only little thing keeping us from closing tomorrow. We were planning on removing the washer/dryer appliances anyways. Do we have to place a drain pipe on the washer sink or can we just remove the appliances and cap the water pipe? I don’t how there would be any problem with us removing them completely and not having washer/dryer at all. Please let me know what you think, my bank and realtor don’t seem to have any answers…

    • Dan Connolly says

      Well as I have said many times, because of the fact that I am not an appraiser, my response is basically a guess. I think you would have to remove the washer, dryer and the sink and cap the water lines and drain lines before he would consider it. Why don’t you just ask him? Someone has to know how to get hold of him because he got into the house once.

      Also, is there some reason you can’t simply hook up the sink drain? That would be the easiest solution.

  67. Brit says

    We are looking at a house and the appraiser went out and appraised a couple weeks ago. He made some comments that the house needed a vapor barrier (which we assumed would come back) also said a light needed to be removed and there was a “slow faucet”. So we installed the vapor barrier, removed the light and fixed the “slow faucet” (mind you the house has been vacant for a couple months because the previous homeowner had passed away) . The appraiser went back out and reinspected for his appraisal and said the faucet was still “slow”.. No other explanations though. The faucet has perfect water flow, in fact you cant get anymore water coming out of it. it even runs faster than the rest in the house it seems to us. So we are not sure what to think.. Can he keep coming back saying that the faucet is slow?? this is the only thing the house is waiting on to close. What should we do and can we report him because both my loan officer, real estate agent and myself all feel he is just trying to get more money out of us…. (he has charged us $675 so far) and im sure he is bound to charge again for another reinspect of the “slow faucet”…. any suggestions on what we can do? this is an FHA loan. Everything about the house is livable and in perfect working condition. The home inspector didnt even say anything about the faucet being “slow”.

    Thank you!!!


    • Dan Connolly says

      Perhaps you could call him and make sure that you are looking at the right faucet, (hot vs cold etc).

      It seems like you might be right about the $ issues, but unfortunately he has you over a barrel. I wonder if the inspector went back and put it in writing that the flow was normal, perhaps the underwriter would accept that.

      Around here there are rules that the water can’t flow too fast and we have to install “low flow” fixtures on homes built before 1995 to confirm that they conserve water.

      • Brit says

        Thanks Dan!

        I agree we could be looking at the wrong thing however the appraiser isn’t clarifying anything other than a “slow faucet”. The seller is having a plumber go out today so hopefully whatever he finds and writes down will be sufficient for the underwriter and we can get this resolved.

        Very interesting that there are such different laws around the country on water flow.

  68. Joe says

    Hi Dan,

    You seem to have tons of experience, and I found your blog after I googled FHA Home Appraisals. I have a couple of quick questions that maybe you can help me with. My wife and I just had an offer accepted on an REO in Ohio. It is in pretty good condition. The only problems it has are: After I tested all the electrical outlets, one of them in the hallway does not work, but all others work. Also, it has a whole house fan that does not work when you flip the switch (all breakers are on). And, it has an in-wall air conditioner that works, but it is hard wired to an electrical outlet, but the wire is ran across the wall (only about 10-12 inches from the unit, and the unit is about 6-7 feet from the ground). We have an inspector coming out next week, but I would like to know how you would perceive these issues with an FHA appraiser coming the following week as well.

    • Dan Connolly says

      My guess would be (as a real estate agent) that the appraiser is unlikely to test every outlet, but the wire running across the wall and the inoperative whole house fan both might be issues that would come up on the list of required repairs. Typically a wire has to be in a steel or hard grey plastic pipe clamped to the wall if it runs on the outside of the wall.

  69. Kristen Armstrong says

    Hi Dan,
    My husband and I are in the process of purchasing an FHA home, and the house is in great condition but downstair(below level) there is some mold and mildew on the walls where they didn’t seal the inside of the wall correctly. My husband and Father went in and cleaned it with clorox and it came right off. We are aware that it will have to be fixed when we move in, but if for some reason the appraiser sees some of the mold will he disqualify it? Its really not a huge deal and can be repaired. Need some advice on this and what we can do to improve before appraiser goes out.
    Thanks, Kristen

    • Dan Connolly says

      Hi Kristen,
      The appraisers do not want to see mold and want it remediated before they will let the property close. I would be careful before you jump in and start cleaning it. Check the EPA website for tips on how to take care of it safely

    • Dan Connolly says

      I just noticed that a response that I made to this weeks ago got stuck in my moderation pool, now apparently I have to approve my own comments! If the appraiser sees mold he may ask for a professional mold remediation company to certify that the house is mold free. You would normally have the opportunity to take care of this before closing. The trick is to be able to get it done within the time frame of the contract.

  70. Shining Star 1 says

    Hi, I just happened to find this blog and love the wealth of information it.

    I have a question, too. We just closed on and moved into our new home less than 30 days ago. The finance company that holds our mortgage want to sell the loan to a big bank and said they are having problems because the bank wants to come in and do their own appraisal. It’s a very uncomfortable feeling having someone come in after we’ve already moved in and have hardly unpacked yet.
    Do we have to approve this appraisal because the lender wants to sell the mortgage or can we ask them to deal with the appraisal that’s already been done a few months ago.
    We are in the process of finishing off the basement, too, and don’t know how this would affect a new appraisal. Any help with this one would be appreciated. Thanks,

    • Dan Connolly says

      It seems odd to me. I have never heard of this and it would make me wonder if the lender was being completely straightforward with me. I don’t know if there is anything in your paperwork that would compel you to let the lender into your house for a second appraisal. I might bring in an attorney to make sure that you would have to comply and what the ramifications of not complying would be.

  71. JR says

    I am purchasing a home (FHA) and the lender completed an appraisal and it came in at $230,000. The purchase price on the signed contract is $250,000. I want a sale price reduction based on the appraisal and the seller (bank owned) has ordered another appraisal and this came in at $255,000. The seller is refusing to reduce the sales price to the 1st appraisal of $230,000. Which appraisal is going to be attached to the property? I understood that the 1st appraisal at $230,000 was assigned to this property and would remain with the property for 6 months. Which appraisal is the controlling appraised value? How long does an appraisal stay with the property?

    • Dan Connolly says

      There is no way I can answer your question with the information at hand. An attorney should look at your contract and the appraisal contingency to see what your rights are. Will your lender accept the Seller’s appraisal? What does the contract say regarding this? These are the questions. The answer is in the exact wording of your contract.

      Talk to an attorney familiar with real estate law.

  72. Jeff says

    My wife and I are in the process of buying a home in southwest Missouri and we were told that the loan could not go through because of the heating source of the home. The heating source is a large propane stove in the center of the house. I was told that a different heating source would need to be added before the underwriter would okay the loan. There is a place for a wood burning stove to be put in and I was wondering if this would be adequate for a FHA loan.

    • Dan Connolly says

      I do not believe that a wood burning stove would be acceptable, but that is a question for the underwriter who turned down the propane stove.

  73. ed says

    I have the buyers approved fha loan but with conditions to to repair some items. If we the buyers would comply and fixed and after all the seller canceled. What will happen?

    • Dan Connolly says

      It depends on the agreement you have with the seller regarding the repairs, and how the contract is written.

  74. Mitchell says

    Hi Dan… listed a 100 year old house that I have been slowly renovating, although from what I’ve read on your blog an FHA appraisal may only consider it being updated. It shows beautifully, but the buyer’s inspection indicated the is still some tube and wire electrical wiring in the attic. What impact will that have? Is it an automatic the old electric will have to be replaced before closing? Everything works fine in the house, all outlets, etc and the panel has been updated as has probably 75% of the house.

    • Dan Connolly says

      There is no one size fits all answer for this question. It will depend on the lender. Sometimes they ask to review the inspection and sometimes they don’t. Some appraisers go into the attic and look for this type of thing and some don’t. I think it’s safe to assume that if they find out about it, they will probably expect it to be repaired, as knob and tube wiring is generally thought to be a fire hazard.

  75. Michael says

    Hi Dan,
    My wife and I are buying a home and the appraisal was just done. The water heater is not in working order, we lack the hot water connection on it and the bottom is rusted quite badly. The appraisal mentioned nothing of this whatsoever. Nor that it even had a water heater. Are appraisers required to make sure that it works and produces hot water? Or have I been mislead by my realtor?

  76. Ashley says

    We Recently Just got an excepted offer on a house that needs repairs. To us it doesnt seem like much that needs to be done but when I talked to my mortgage broker (who is also a family friend) She really freaked me out about the FHA passing it for a loan. The only problems it has A a broken window, old water damage on the ceiling in one of the rooms, a brick in the foundation is cracked. Are these things thar would cause it not to pass if so I want to see if we can make the repairs before the appraiser comes. Oh and i never heard till now that you need a stove there is no appliance but i have a stove i could throw in. Any suggestions or answers?

  77. Melissa says

    I had a question. FHA loan and appraiser said we need to scrap and repaint the railing on the front porch. However we are planning on replacing the front porch. Can we just remove the railing. Its a very low to the ground porch. No real saftey issue if no raling?

  78. Dan Connolly says

    As far as I know, the basement would not have to be repaired, but it is up to the appraiser that goes out. They worry about health and safety so the ceiling would have to not pose any risk to injury if more of it falls, and the carpet could be a tripping issue or mold growth if there was a leak that caused the problems.

  79. Liana says

    Hi Dan,
    God, there is so much useful info on your blog!!! Thanks, i got so many answers!
    However, i still have one question: we want to buy a house with a FHA mortgage. The house is a quad-level and has some issues on the lower level (damaged ceiling – as in missing a part of it and missing part of the carpet). Now, considering that the lower level is below grade would it count for the FHA appraiser??? I mean could they ask for those repairs to be done before closing? I mention that there is enough “livable” space as there is a living room, kitchen, 3 bedrooms and 1 1/2 baths on the grade and above levels – would this count for the FHA appraiser??
    Any input would be appreciated. Thanks!

  80. sandi says

    Hi we have been house hunting for a month now and it is getting very frustrating because everytime we find a house we love our agent says it is not FHA approved but most of the work is minimal like holes on the walls a few broken windows and no stove.I really love this home what can we do to get it?is there any possibilities?

    • Dan Connolly says

      I know FHA has relaxed their standards on some issues (like holes in the walls) The best thing I could suggest is to move forward, let the appraiser have a go at it and see if there are actually repairs required. I know people who have put a $100 craigslist stove in before closing, and had the appraiser come back to check it and closed.

      This was rather than putting a really nice stove in which would not be covered by insurance if it took a walk before closing. Then after the closing they put it back on craigslist and got their 100 back.

  81. Jenney Chung says

    If there is a kitchen set with stove in a basement, does it need to be removed before getting an FHA appraisal? thanks!

    • Dan Connolly says

      I don’t think they are going to count it as living space, but I don’t think they will ask you to remove it. If they do you can always take it out and get them back out to check before closing.

  82. Dan Connolly says

    If you are waiting for the lender to order the appraisal, that is unacceptable. If you are waiting for the appraiser to come out, and it has been ordered, that is unfortunately kind of normal. Ask you Realtor to speak to someone at the mortgage company and make sure that it has been ordered.

  83. tony says

    Hey Dan, we have a buyer for our home, passed inspection and have been waiting 25 days now for the lender to order the FHA appraisal. Just found out today that the buyer works for the mortgage company and they seem to be the holdup. I can’t get any info from my realtor other than to be patient. I’m about ouy of patience at this time. Any advice? The home is in FL.

  84. Nicole says

    Also if you lost your inspection report and can’t remember who did it is there any way to track it down on our previous agent side? Do agents keep a copy of our inspection report (3 years ago) of houses they sold?

    • Dan Connolly says

      That would be a good place to start. I am a packrat so I keep everything for years. A lot of people shred after 2 or 3 years.

  85. Nicole says

    We are sellers in Michigan who are trying to sell our house to someone who is using an FHA loan. The buyers had an FHA inspection performed this week. His report was a huge joke. It was full of crazy things like C/A needs to be replaced (he claimed it was over 15 years old) when it is only 9 years old. Said there was a broken window when it was just the privacy tint on a window facing the neighbor in the kitchen was peeling. How he even made that mistake I don’t know? I wish I had been here with him.

    Anyways because we know half this stuff is CRAZY. We offered to pay for another inspection because the buyer got scared after reading his ridiculous report and didn’t want the house. The buyer agreed. I am wondering if this report can be used instead of the crazy one?

    What are like the top 10 main inspection things FHA looks for in order to agree to the loan?

    • Dan Connolly says

      When you say FHA inspection do you mean the FHA appraisal? or are you referring to the buyer’s home inspection?

      • Nicole says

        Thanks Dan for answering so quickly! Sure you don’t want to move to Michigan and sell my house. :)

        Funny I thought it was all one but upon further “inspection” (sorry couldn’t help myself) it is the buyers inspector. Now do they turn their inspection to FHA then they send out an appraiser? The second inspection we are paying for is tomorrow morning. Would it be helpful to have some of our receipts and info on the house for the inspector. Some of the things the other inspector said wasn’t true and we have prove. Should we leave that for the inspector? The agent? The buyer?

        • Dan Connolly says

          Sorry for the delay, I usually get an email when I get a comment, but I either didn’t get it or missed it somehow!

          The inspector may be interested in your receipts etc. (I know it probably already happened). The truth of the matter is that every one of them is different, and brings a different view to the table. Some are receptive and some aren’t. You have to feel them out and if they seem like they aren’t interested, don’t push it. This is true for the appraisers as well. After the inspection is complete the appraiser comes in and may have a different idea about the condition of something like the roof, than the inspector has. In any case you provide what information you have and if they seem to be pushing you away, then back off and let them finish without any imput.

  86. Katie Brewer says

    We just had an appraiser come out to the home we are wanting to buy. The bank accepted our offer and all the paper work is done, but after the appraiser looked at the home he decided to inform us that the deck needs repaired when we clearly stated that we are just going to tear it down because it’s unusable. Can’t we just sign a waver stating that we won’t sue if we are injured by the deck? We just want to close on this but the deck is stalling us when we are just going to tear it down.

    Thank you!!

    • Dan Connolly says

      Normally it has to be either repaired or removed before closing. Typically with these types of requests they will not accept a promise of repair/removal after closing because they do not want to have to enforce the follow up and checking to see if it was completed. Either you will have to get the owner to repair or remove, or you will have to get permission do do either before closing. In the event that they let you remove it you will have to deal with what is left after you remove it. These could be building steps, if there are steps necessary from a door that used to open onto the deck, handrail, removal of all the posts and repair of any gaps in the siding or flashing where the deck used to attach to the house.

      The other option would be to change the loan to an FHA 203K loan that would let you borrow the money to either deal with removal of the deck or installation of a new deck.

      Their argument is that the low down payment does not give them enough equity to do these repairs if they let you close without the repairs and you never made the repair and let it foreclose.

  87. Sarah says

    We are scheduled to close on a REO home this Friday. After an appraisal and inspection, the listing agent is still not getting us answers like: 1. the thermastat does not work, are they required to fix this? 2. There are electrical units not in approved electrical boxes (they are literally just hanging out, taped together with electrical tape). Is this FHA approved? 3. The deck is 100% not up to code. Is the bank required to fix this prior to close? 4. there are 4 leaks in the attic, are those FHA required fixes? 5. the heating and a/c show “signs of heavy rust” in our inspection. Are they required to service and clean these?
    We are frustrated beyond belief b/c our “realtor” has never dealt with this sort of situation, and frankly does not have a clue what to do and what questions to ask. Can anyone simply point me to the FHA requirements, or even tell me the answer to my above questions?
    THANK YOU!!!

    • Dan Connolly says

      The document that would answer these questions would be the contract for purchase of the property, and all I can give you is some ideas based on how things generally go.

      When you have an inspection and an FHA appraisal, the repairs that are suggested by the inspector and required by the appraiser are NORMALLY not assigned to one party (like the Seller) to repair. The appraiser is stating that they will not make the loan unless the items are either repaired prior to closing, or included in a rehab loan and addressed by the Buyer after closing. The appraiser normally does not say who does the repairs.

      Typically your contract will specify what your rights are under the inspection contingency. I think if your Realtor doesn’t know the answers to these questions then you should call the Broker of his company and discuss your options with him (or her)!

  88. says

    Hi trying to buy a modified A frame home in OK. I am conserned about the apprasial because the home is unusal for this area. The real estate agent tells me that I might not be able to get an FHA loan because they can not find a property to compare it to. Any way to get around this?

    • Dan Connolly says

      Not that I know of, the only way to find out is to pay for an appraisal and see what happens. I have seen homes appraise with no obvious comps and have seen homes with lots of comps not appraise. rhyme or reason!

  89. Cindy says

    My son is in the process of buying a foreclosed property and has been approved through FHA. The house has to have a foundation inspection. The foundation is as follows: a concrete slab with 4 blocked walls and piers. The walls are approximately 6 foot tall, resemballing a basement. None of it is underground. We found out from our realator that the piers have to be wrapped because they are not concreted between the joints of the blocks, they are dry stacked. This is a manufactured home and is tied down. The cost to fix the piers is $3000. The bank does not want to pay for this. Do the piers have to be wrapped or is what is there adequate? This home is located in Kentucky.

  90. Lissa says

    How long does it take to get an appraisal done these days? I’m trying to purchase a home using FHA, and I’m a fully qualified buyer. But the appraisal has been ordered for 2 weeks now. My new job starts in 4 weeks, and I’m getting fed up. My realtor says it’s the new Federal Regs, but I’m getting very stressed. What can I do?

    • Dan Connolly says

      The best thing in this circumstance is to be patient. I know it’s hard, but pushing may do more harm than good. The lender can put in an inquiry to see if the order got lost in cyberspace, but that’s as far as I would go.

  91. Roscoe Ronto says

    Do we know if a buyer can use the fha 203-k streamline to mitigate mold on a Fannie Mae owned property We already have the appraisal and there is room on the value but we are hearing conflicting points. Some say no because it’s a service being provided and not a repair. We already have a bid in hand to mitigate.

    • Dan Connolly says

      Sorry I missed this question earlier! You can include mold remediation in a 203-K loan. Normally the appraiser will require that it’s dealt with before closing if it’s not included in the renovation bid.

  92. says

    We are selling a home. The appraiser has concerns with an old unusable barn on the property.There is a hole in the foundation of the wall.The rec. someone to come and look at it to re enforcethe frame. If it can be fixed does the buyer or seller pay for this? What happens if it is un fixable?

  93. Debby says

    During an appraisal for FHA, is the land value considered. I am purchasing a home on 2.5 acres in CA. I was told FHA does not consider the land, is this true?

    • Dan Connolly says

      Well I start every other answer by saying “I am not an appraiser, I am a Realtor” I did take the basic appraisal course but that was over 20 years ago and I have done no continuing education. But I have been involved with many closings over the years and my opinions are based on my observations.

      When an FHA appraiser values a home on 2.5 acres they normally look for comparable properties. That would be similar homes on large tracts of land. They don’t give extra weight to homes on larger parcels or take off some of the value for homes on 1.75 acres, they just find generally similar properties and compare the houses. So normally they wouldn’t compare it to a home on a 1/10 acre tract in a subdivision.

      Hope that helps!

  94. James Kern says

    Hi, My wife and I just had an appraisal done on a house yesterday for an FHA mortgage and I’m not sure the appraiser liked what he saw. First I’ll give you a little background. Homes in this neighborhood typically go for about 360-460k. On the home we’re looking at is shown as about 366k. The seller is a both a longtime friend and a volunteer firefighter. He picked up and moved to another state and wants to see his house go to another fireman, so he is selling the house for 310k. I had no problems whatsoever qualifying for the FHA loan. We had the appraisal done yesterday, I think the appraiser had issues with a few things. A set of stairs probably needs railings, and there might be some very minor cosmetic issues that the FHA inspector pointed out that FHA may not like. There is nothing that the seller and I couldn’t take care in a weekend (he’s built many homes for habitat for humanity and I’m very handy… this stuff is cakewalk and inexpensive). Here’s my question: Do they basically make their decision and that’s it? Or are they at least slightly reasonable and make some demands and come back for a re-inspection?

    • Dan Connolly says

      Hey John,
      I am sorry it took so long to reply. Normally I get an email when someone posts on my blog, but somehow that stopped happening!

      If they have issues with the house they give you a list. You can correct the items and they will come out and reinspect. Not a big problem normally if you can do the work!

  95. Tarl johnson says

    Hi my name is Tarl i just had a appraisal done on a house im trying to buy. The appraiser refused to provide me with a copy and said that the mortgage company would have to provide it and they where only obligated to do so 72 hours after closing. can you tell me the laws on this.

    • Dan Connolly says

      Well I am not sure what the laws are, (not being a lawyer) but I have never heard of someone getting the appraisal until three days after the closing, after 24 years in the business. You paid the mortgage company for the appraisal and they paid the appraiser so I understand why the lender gets it from the appraiser, but three days after closing? I never saw that.

  96. Dan Connolly says

    You can buy it with a rehab loan. Depending on which part of the country you are in, you may be able to use the FHA 203K loan. Different areas have different loan limits for FHA. If they aren’t high enough in your area there are conventional purchase rehab loans available. You have to used contractors that are approved by the lender and go through some hoops to get the loan, but that would be one way to purchase.

    I think that it would be dangerous to put a kitchen in and then try to remove it if the loan doesn’t close. For one thing the cabinets etc would not have much value after having been installed and removed. Another problem is that the installed items become fixtures and technically then belong to the owner. Just like if a tenant installs something while renting, they do not automatically have the right to remove it when they leave.

  97. Joe D says

    We found a house, but it has no kitchen. it’s also not in the best condition but it’s livable. I know it cannot be appraised in its current condition. It’s not livable without the kitchen.

    what can be done. Can you buy the house, and contract with the seller that we will add the kitchen, but if escrow or sale falls through for any reason, we can take what we put in, back out? It’s a short sale so we know there is nobody on the other side motivated to install a kitchen. Only thing left is cash purchase but at $500k not many cash buyers with that much loot.

  98. Cynthia Phillips says

    I have several issues going on with an GA appraisal that was ordered by the buyers mortgage company. It is about 6,000 less than the contract/selling price. The appraisal does not include a new roof, gutters, down-spouts, new granite kitchen counter tops, new granite counter tops in both bathrooms, new tile floor in master bath and tile around tub, new shower in master bath, new wood vanity in master, new slate tile in kitchen, laundry room, and recently extended walk in pantry with slate tile on floor. New/upgraded kitchen faucets, new/upgraded shower faucets, bathtub faucets and bathroom sink faucets, new undermount sinks in kitchen and new double porecelin sinks in master bath and new porecelin sink in 2nd bath, freshly painted exterior and all rooms interior, new stainless steel applainces,, all new light fixtures through out entire home and 3 new ceiling fans, has my home listed as a foreclosure and it is NOT A FORECLOSURE, has the home on a slab instead of a crawl space, has the land listed at 0.06 acre instead it should be 0.47 acre. He even has the date of his inspection WRONG. Both realtors involved and myself have asked for a review and an adjustment of the property. The only thing that he is willing to correct is the issue of the land/acre. He said this is all he thinks my home is worth in his opion, because all i’ve done is bring the house up to date. I don’t know what to do being that he has filed this appraisal with the state of GA and i am stuck with this appraisal for 90 days. Please give me some advice pretty fast, if at all possible. Thanks

    • Dan Connolly says

      One thing to understand about appraisals is that the appraisers do not get to go into the houses of the comparable properties to see what the upgrades are in the comps. So they don’t give you credit for individual upgrades, they just rate your house (average, very good, excellent etc).

      Unfortunately what you are doing is basically all there is to do. Did you go back to the appraiser for the review or the manager of the company that ordered the appraisal for a appeal/review? The banks go to a appraisal company that orders the appraisal from a bank of appraisers and the manager of that company is where you appeal.

      I am starting to hear of some people who have had some success with appeals. I would suggest you try to find comps of homes with more of the renovations like you have which have sold for more money. They have to be similar in age and size and should have closed ideally in less that three months ago or at most 6 months ago. They also have to be close to yours (within a mile). Sometimes if you actually have better comps than the appraiser used it is easier to convince someone to adjust.

      Good luck!

      • Cynthia Phillips says

        Dan, Thanks so much for taking the time out of your busy life to give me such good advice. I have requested a review with the appraiser and he corrected his mistakes, but says that he can’t change the price of the appraisal. I contacted the 3rd party national vendor that sent him to my home for the appraisal and that manager said that if the appraiser want correct the price of the home, then he can send out another appraiser . Can the price of the appraisal be changed if the appraiser already submitted it to The State of GA? I guesss we’ll have to see what happens. Thanks again, Cynthia

        • Dan Connolly says

          Glad I could help! Let me know how it works out. I am also in Georgia so I would be interested if you can get an adjustment.

  99. missy says

    We had an FHA appraisal done and the square footage was not done correctly. Also they didn’t include the 3rd floor at all. Can we get the appraiser to change his calculations – it would increase the value of the appraisal and we would then qualify for more debt reduction.

    Any answers?

    We are so frustrated.

    • Dan Connolly says

      The only hope is to get the lender to contact the manager of the company they went to get the appraisal ordered and appeal.

      The third floor has to be taller than 7? in order for it to be counted and the stairs would normally have to be built to code as well for some appraisers to count the attic. If you have those things, you may get somewhere.

  100. nadine says


    we had our house appraised by a fha appraiser. the house was a forcloser when we bought it. So it was only 152.000. We did some things to it and so on. Not very expensive ones but we but some money in it.

    We now have to move and wantet to sell the house for 185.000. We have very strong houses next to us too!
    The appraisal came back at 165.000. He even used a house that was sold 2 years ago in the comps.
    There is nothing wrong with the house. Our Realator had even higher ranged price homes for comps very close to ours. Same size house and lot! (2ac.)

    Why did it come in so low and why are they allowed to use a comp that is 2 years old when we have newer ones????

    • Dan Connolly says

      I hear of this kind of thing over and over. If you have a way to get in touch with the appraiser you can try to give him the comps that you have. They have to be really similar homes, same age range and square footage should be around 10% +/- . Sometimes they will consider the comps. (Ideally, when you meet the appraiser to let him in is the best time for that.)

      But if you can’t get in touch with the appraiser, you could try to appeal the results. So far I haven’t heard of anyone who has been successful with this approach, but it used to work.

      Really, it is a chronic problem we are facing. The inflexibility of the appraisers has caused many sales and refinances to fail.

  101. JUDY says

    Hi Dan,

    There was quesiton posted earlier this month and I don’t think you answered, or maybe I overlooked it. It was asking of it’s true that a home cannot have more than one FHA appraisal done over a period of 6 months. Is this true? I am asking because I am very nervous about my FHA appraisal.

      • Dan Connolly says

        UPDATE! I spoke with an FHA lender who I do a lot of business with and she told me that there have been some revisions recently. The appraisal will be on the record for only 90 days which is good news. The other tip she gave me is that it is getting easier to appeal a bad appraiser. The lender should be able to submit a list of your comps to the manager of the company who assigned the appraisal. She said that they are hearing about some people having success with that!

  102. Sara says

    Hi Dan- My husband and I just accepted an offer on our house for $360,000. The problem is, the comps in our area vary a lot due to some foreclosures. In looking at the comps it seems that there are houses that have sold for $350,000 to $365,000 that are the exact same layout. Our house, unlike most of the lower comps in the area, has been completely renovated and that makes up the difference in the home price. Average appraisal range from $320,000 to $330,000 in our neighborhood. Is an FHA Appraiser going to look at that and appraise our house at the same rate regardless of the major differences inside? Is it true that you can only get an FHA loan for 3% more than the appraisal?
    Thanks so much! Sara


  103. ashley says

    My husband and i are under contract on a forclosed home being sold as is. We were doing a USDA loan but due to them running out of money we switched to fha. The old owners took almst every lighting fixture when they left. So there are a bunch of spots with exposed wires in the ceiling. We have no issues buying new lighting after we close, but will the fha appraiser require the lights be installed before we are allowed to close? Also the home doesnt have central air, some of the windows have screens but not all of them do. Does every window have to have screens, or is it okay if some do?
    Thanks so much, it has been such a long process and i worry about doing a lot of repairs to the home before we close but with it being a forclosed home the bank wont be willing to make any repairs so we need to do it before hand and just pray nothing goes wrong with closing.

  104. Tammy says

    Hi Dan,

    Thank you so much for your blog it is a big help.

    I am a first time homebuyer, interested in a home that has water in the basement(two puddles.) Pennsylvania has recently suffered from a lot of snow and more recently, rain. There are a two puddles in this basement, I believe we will need a french drain or something to that effect.

    My question is do we have any protection if we pay to fix the water in the basement problem and the sale does not go through? Can this be part of our contract?

  105. Jenny says

    Hi Dan – I did see your comments about another FHA issue around lot sizes. I have an offer on a house that is in jeopardy because the appraisal came in slightly lower than expected and the sellers do not want to take the lower amount. My concern is that the property in question is at a lot size of 0.28 acres and the appraiser listed the comparables between 0.21-0.27. The comparable properties are actually between 0.12-0.16 and this property is the only one on a double lot size. If you take the land worth on the county website and average it on comparables, it makes up for the difference in appraisal. I understand it is rare for an appraiser to make adjustments and we have filed for a review by the lender. Is there any hope that this error can be corrected? Thank you!

    • Dan Connolly says

      Well I haven’t seen any appeals work yet, but I would say that there is some hope. The other solution for you would be to pay for the difference. You would have to put down the difference of the appraised price from the lowest the Seller’s would take and then also put down the 3.5% of the appraised price.

      One negotiating tactic that may work is offering to split the difference with the seller, you come “out of pocket” for half the difference and they do as well. I think that the definition of value is what an educated purchaser will pay, so if you pay a little over the appraised value that will establish the new value going forward. No one has a crystal ball but I am hoping that the values will recover soon and its a pretty safe bet that they will in the long run. If you really want the house it may be worth it.

  106. Gwen says

    Hi Dan, Thank-you for your first fast reply. Heres another question for you. We wrote an offer on the house based on the appraisal. Our loan officer called and said I hear you have an accepted offer, I was happy, this was 2 days ago. My agent is going out of town for a week so I e-mailed her and asked her for my Ecrow number and the name of the escrow officer. She e-mailed me back and said the sellers agent has not been able to contact the seller yet. I e-mailed the loan officer and asked her not to order the appraisal till we have an accepted offer. The seller also needs time to find another house since her husband lost his leg and can’t go upstairs. I do not want to pay for an appraisal unless we are in a contract. Your thoughts please???

    • Dan Connolly says

      Normally I think you do the inspection first and then the appraisal. The reason is, why pay for the appraisal if you can’t reach agreement on the inspection? The reason for the inspection to be done first is that the inspection is in your control so you can hopefully get it done quickly. The appraisal takes longer to complete.

      But all that being said, I wouldn’t do either until you get a signed contract from the seller.

      Who told the lender you were under contract?

  107. Aaron Fecay says

    We have had our offer accepted on a forcloser home that sold in 2006 for 195,000. It was a highest and best offer of 108,000 when the home was listed at 89,999. It is a little bit bigger than some most of the other homes in the area at 2400 sq/ft with 4 bedrooms and has 3 full bath as opposed to 2 1/2 bath. It has all appliances and is in move in condition. The comps for the past 6-9 months are any where from 80-165 but if you go from the past 3-6 months the forclosers are being sold for 80-90 but are destroyed inside, even some missing the central air units. Do you think my home would stand any advantage? Sorry so long, and thanks for the help

    • Dan Connolly says

      It sounds like you have a pretty good chance of appraising for the sales price, but you really never know. I have seen homes with plenty of good comps come in low and have seen homes with no comps appraise over the list price. It just depends on the appraiser and the exact data he is looking at.

  108. Aaron Fecay says

    I am in the process of purchasing my first home and have had many of the same questions, I would just like to say thank you for having this blog. I think some of this information will help my wife sleep

  109. Gwen says

    Hi Dan, We wrote an offer for a home at $155,000. The list agent says the comps are around that price but our agent did not get proof of that. The seller countered at $165,000. My husband wants to counter back at $160,000. We are worried the FHA Appraisal will come in lower, then the offered price, Are we then obligated to pay to pay the above prive out of pocket. We can pay out of pocket up to $10,000. What do you suggest??

    • Dan Connolly says

      Well the contract will control what you are required to do. In GA the FHA addendum has a blank for what the property must appraise for, and states that you don’t have to close without penalty unless it appraises for that amount. Most agents put the sales price in there. I think the FHA addendum in most states does not require you to close if the property does not appraise. But look at the contract to be sure.

      If it appraises for less than the agreed price I would ask the seller to sell for less, to start. Once it appraises for a certain price nobody will be able to buy with an FHA loan for more than that price for 18 months unless they pay the difference out of pocket. 9 times out of 10 the seller will reduce unless they owe more than it appraises for. If they refuse you could then consider paying over the appraised price.

  110. Vicki H. says

    Hi Dan,
    Can a person get an FHA loan on a house that they are buying that does not have central heat and air?

    • Dan Connolly says

      As far as I know, as long as the heating system is installed to code, it doesn’t have to be central heat. I also don’t think you are required to have central air. In homes that don’t have it, there has to be windows that open in each bedroom (with A/C or not) and there have to be screens.

  111. Renee says

    I just bought my home in Oct. 2009 and now need to sell it. We have an offer that we are dealing with right now but having appraisal issues. I am being told that FHA has a rule that if an appraisal has been done wth in the last 6 months a new one can’t be done. Is this true??? We have made several improvments to the house and feel that it would appraise slightly higher then when we purchased it.


  112. Caroline says

    My husband and I are applying for an FHA loan and had the property appraisal today, the appraiser said we got the house really cheap and he said he was going to have to work at lowering the price of the property in the appraisal, since he would appraise it almost $100,000 over the purchase price. Why would that be a problem? Could they deny the loan because the property was appraised almost $100,000 over purchase price? Shouldn’t that be a good thing?
    Your website is very educational! Thank you for taking the time to help us newbis go through this cumbersome process,


    • Dan Connolly says

      Believe it or not if the appraisal comes in drastically above the sales price it can be a problem. The underwriter sees a red flag and thinks there may be something wrong with the property or the area in general. I had a buyer who was turned down for a loan for a house that was a brand new home in foreclosure. It was built to be 229,000 and it sold for 135K the appraisal came in at 189,000 and they turned it down because it showed a declining market. That was a conventional loan, by the way, and FHA did make the loan, but they also appraised it for less.

  113. Josh Chambers says

    Thanks for all your helpful information.

    My wife and I are having a similar problem with a house and converted garage. The house we are trying to buy had it’s garage converted into a studio apartment with a closet, full bath, and full kitchen- but no permit. We were told that as it is now it will not pass FHA appraisal requirements because of the permits and a new requirement that a single family home cannot have more than 1 kitchen. Have you heard of this kitchen requirement? Would it be reasonable to order an appraisal and hope the appraiser doesn’t ask about the permits – or is it standard procedure to check for them?

    Thank you very much,


    • Dan Connolly says

      Well if you can afford to take the chance, you might see. I think they will probably reject it but there is a wide variety of skill levels with appraisers. Some are much more lenient than others.

  114. Nate says

    Hi Dan,

    Thank you for the information, I’ve found it most helpful. My girlfriend and I are attempting to purchase a 4-unit condo near Boston. We have an accepted offer, the home inspection got all A’s (building is from 1890 but was completely gutted and refinished within the last six months), and we’re in the process of applying for a loan with very good credit (low to mid 700’s) 3/4 units are already owner occupied, as well as ours will be. The bank appraisal also came in at higher than purchase price, and we were looking to put down 3.5-5% down payment OR MORE.

    Sometime in the last few weeks, our mortgage broker applied for a conventional loan without our knowledge, and never mentioned that the FHA application had been denied. We just found out today when we receive the commitment letter, that it was not FHA.

    My question is, is it possible that FHA would decline an application on a property that is newer than 1 year? If so, under what conditions is it usually declined and/or accepted?

    Secondly, the rate we were quoted (and locked) with our mortgage broker was 4.875% with a $5000 upfront MI payment. However, the new mortgage only requires 2-3% downpayment (something that doesn’t affect us), no upfront MI, but the interest rate is 5.375% (0.5% increase). The PMI may also be canceled after only 2 years with 22% equity as opposed to FHA’s 5 years/20%. Should we argue for, or try to get the FHA loan or should we take the the new loan? Does this decision change if the conventional loan is assumable? What if it allows for the property to be converted to a rental property at a later date?

    I know this has a lot of information / questions, but we’re first timers, and it’s all very overwhelming! (Our mortgage broker also has not done their job in educating us either, even with our many questions).

    Thanks again,

    • Dan Connolly says

      I don’t understand why the FHA would deny you. Did the loan originator not give you a reason?
      The conventional loan sounds good. I am not sure if this is national but as I understand it the FHA MIP can only be canceled when you have actually paid the principal balance down to 80% of the original loan amount, not if you get the property to appraise for more. The assumability of the FHA loan (qualifying) is a plus, so if the conventional loan matches that, it makes it more attractive. I don’t know the sales price, but saving the $5000 upfront payment and greater chance pf dropping PMI both could be a win-win.

  115. Jeff says

    I am under contract with a foreclosure and am having the home inspection tomorrow. My lender has ordered the appraisal last week as to get it in before the 15th (tomorrow) as they are changing requirements on FHA appraisals. If the appraisal had been done on Friday or over the weekend and didn’t pass, would my lender be required to let me know before spending money on the inspection. Also, the house is listed as a 2 bed 2 bath. After visualizing the house, I am now realizing the master bedroom does not have any windows. However, it does have a window in the bathroom and there is an opening from the room out into the living room. By having the egress out to the living room via the doorway, would this pass FHA guidelines to close until I can add a couple windows and enclose room?

    Thanks for any input.

    • Dan Connolly says

      I am sorry to say that I can’t tell you if it would pass. A lot will have to do with whether there are other similar properties that have sold recently. We have lofts where the bedroom is separated by a partition wall that doesn’t go all the say to the ceiling and that don’t have windows which pass, so I think that the rules for single family homes and condos are different. Good luck! Remember, I am a Realtor, not an appraiser.

  116. Janet Reed says

    what about a home that was built in 1978? Do we have to worry about peeling paint and have it called for repairs? I am an appraiser in Mpls and have run into this problem. Thanks!!

    • Dan Connolly says

      All of the paperwork I have seen talks about needing to check for lead based paint in homes built BEFORE 1978. So I would think that a home built in 1978 would not be affected. This is an opinion though, I would think if you are an appraiser you would have something in your guidelines that would specifically address this!

  117. Teresa says

    Hi Dan, we just went through the process of getting our offer accepted, we have an FHA loan. Just as we were about to sign the papers to finalize everything they told us FHA wouldn’t approve it because the garage was converted into a room which has a closet, window and door. I’m upset for two reasons, one why didn’t the realtor or the lender notice this before we went through the whole process and got our hopes up and second why won’t they accept a house that has a converted garage into a bedroom? What can we do to make sure we don’t go through this again. FHA seems very picky and I don’t know what they will accept and not accept. But shouldn’t the realtor know? Any suggestions would be greatly appreciated.

    • Dan Connolly says

      I have seen this before. Part of the issue may be whether or not there were permits pulled for the conversion or if it was done on the sly.

  118. Dan Connolly says

    I think you probably can’t get your appraisal fee back. They should tell you why you were declined though! If the house appraised and you had a credit issue, sometimes you could get the credit issue straightened out and try again.

  119. Carol Miles says

    Help! My husband and I were pre-approved for loan refinancing 3 months ago. Since that time we paid to have the home appraisal done, and have completed all the paper work, and jumped through all the hoops. Keep in mind this has been going on for 3 months. There is always some excuse given as to why things are taking so long, but come on, three months? I got an e-mail from our lender today saying the loan was denied….but no explination as to ‘why’. My question is, since we were cleared in the very begining for this loan, and paid the appraisal fee, can I get that fee back??? This loan company is very sllllooooooow to respond, if at all, to any questions we’ve had in the last 3 months, so I’d like to know if we have any recourse? HELP??

  120. Dan Connolly says

    Again, I am a Realtor in GA, not an appraiser. As I understand it, the appraisal standard is to look at square footage as a primary tool is establishing value, so a 2/2 home and a 3/2 home with the same square footage could have close to the same value. I believe that being said, a bedroom has to have a closet to be counted as a bedroom, even though agentss everywhere commonly call rooms without closets “bedrooms” trying to get as many prospective buyers in as they can to look at the property. I don’t know if FHA has a nationwide standard in establishing bedrooms.

  121. Audon Trujillo says

    Your definition of bedroom which includes having a closet does not hold in New Mexico. Here Realtor’s commonly list rooms that do not have a closet as a bedroom. The rooms do generally have a window no more than 44 inches off the ground. Does FHA have a standard definition nation wide for what constitutes a bedroom? And, do appraisals look at homes that have the same number of bedrooms (i.e., with built in closets) or does the square footage of livable space have more weight than the number of “true” bedrooms (i.e., rooms with “a built in closet”?

  122. says

    Hi Dan,
    I am a Realtor in Alabama and I have been searching the internet for hours looking for some kind of guidlines on FHA loan approvals. You have been very helpful! I just wanted to say thank you for your blog!

  123. Tyler says

    I have a rural home that is in average condition, however there are no floor coverings in one of the bedrooms and some of the drywall that we have replaced has not been taped and mudded yet. The appraiser mentioned these things in the report but said it still met hud requirements because there were no major structural deficencies and there were no safety or health issues. The underwriter said that it does not meet hud requirements, and wont close the loan. What is your opinion on this discrepencey.

    • Dan Connolly says

      In a conflict between the appraiser and the underwriter you will have to get the underwriter on board if you want the loan to close.

  124. Sunny says

    Hello. How often will seller pay for lender required corrections if any as indicated in FHA Appraisal. Seller converted small area in 6 car gar to a work out rm with wood flooring, and inside house turned a bonus rm into a bd rm adding french doors, which req some entrance wall structure change adding double doors leading into rm. Thank You for any info you can give.


    • Dan Connolly says

      There is no rule but in our market it seems like the sellers are more willing to do lender required repairs than ever before.

  125. Rea says

    I closed on my FHA loan approved home in June 2009. Since the snow fall I have found there is a leak between the chimney and the exterior which has infiltrated in one of the bedroom walls. Now the wall is buckling with the water damage and mold is definitely there.

    Is there any recourse for me since this will require some repairs to the outside structure as well as the interior walls of the bedroom? This is a major safety hazard that greatly concerns me.

    • Dan Connolly says

      FHA has forms that you sign when you close that state that they have nothing to do with property condition and make no warranties. So any recourse you would have would only be with the seller. You would have to have evidence that the seller knew about the leak and hid that from you.

      Did you have the home inspected? If so, check and see if the inspector saw any signs of leaks.

      As far as the mold goes, my understanding is that the toxic mold does not typically come with roof leaks, it has to be an ongoing plumbing leak or a flood where the water sits for a long time. You can read what the EPA says about them here: The field of mold remediation is rampant with contractors who make their living scaring people about mold. Be careful. The fix can be as simple as stopping the leak, treating the affected areas with clorox and replacing any damaged plaster or sheetrock/drywall.

  126. Val143 says

    If the subject property has a completed space consistant in quality of construction as the main living AND can be entered through the main living area without having to exit the main home and re-enter, it can be considered living square footage (meaning, you can move freely from that added room to other living areas.)

  127. sheri says

    I just had an appraisal done by a home I’m planning to purchase with an FHA mortgage. The appraiser said that the basement had some standing water which my mortgage broker stated was a small amount. The appraiser stated the basement needs to be cured and waterproofed. No one can tell me exactly what this means. My contract states “as is” and I would be responsible for these repairs prior to closing. FYI: I did have a home inspection also which the inspector did find evidence of a previous leak, there was a small damp area 2ft by 2ft.

    • Dan Connolly says

      Even though the contract states as-is, you may still be able to convince the seller to fix it. If you do the work yourself you may lose that money if something happens and the sale doesn’t close. Your contract will dictate what happens. In Atlanta GA the FHA addendum states that if the property does not appraise the buyer does not have to complete the purchase without penalty (loss of earnest money). So if the seller wanted to close they would have to do the repairs or you could walk away.

  128. brenda scroggins says

    i plan to apply for an equity loan soon, my 3500sq.ft. house still has 2 rooms unfinished (not sheet rocked). Can I still get an appraisal value for my home?

    • Dan Connolly says

      Remember I an a REALTOR not an appraiser. My understanding is that you can get an appraisal on your home, they just won’t count the unfinished rooms. This is as long as you have enough finished space to be a usable home. In other words if you don’t have any finished bedrooms, probably not.

  129. Brett says

    I’m selling a home and am in escrow with buyers using FHA. The appraiser report listed my property as 0.92 acres (when it is actually 1.14 acres). His report also values it $15k below the offered sale price. When I challenged the report, and asked that the 9,000 extra square footage of the lot be included in a revised report, I was told that it would not make any difference in the appraisal price. Does lot size not play a determining factor in these types of appraisals as far as home value is concerned? For my neighborhood, lot size is one of the most defining factors. Any input on this issue is appreciated.

    • Dan Connolly says

      I am sorry this response took so long. The bottom line is that you are at the mercy of the appraiser that was assigned to your loan and there is not much that you can do about his ruling. Typically in our area (and this is a local issue that does not necessarily transfer across the company), as long as you have a lot that is not considerably smaller than the average lot in the neighborhood, the lot size does not add value unless it is so big that the property could be subdivided without any variances. But it is important to also know that you cannot typically get a loan on vacant land.

  130. Dan Connolly says

    I have always seen appraisals come in close to the purchase price. I think that the appraiser is instructed to keep it close, although I have no proof of this. I have heard the explanation that you gave and I have also heard that the lenders in conventional loans don’t want the appraisal to come in too high because people could contest the PMI.

    I had a loan that was turned down this year because a buyer was paying 135,000 for a house that appraised for 189,000. The lender saw this as a red flag and would not make the loan. The saw it as evidence of declining values. That was a conventional loan and we did get the loan through with the FHA.

    There are a lot of people out there who have had property appraise for well under the sales price who would love to trade places with you.

  131. Brian says

    Hey Dan,
    We just had an FHA appraisal for a home we’re purchasing and I’m a little confused about something. His “value” came in at $112,000…we offered $110,000 on the home because EVERYTHING we’ve seen on it says it’s worth much more. All the realtors, inspectors, everyone who’s seen it has said they can’t believe the deal we got at $110,000. The area is very strong in holding value as well…even the county auditor only dowgraded the area by 3.5% for the newest 2009 appraisals. Some areas of the county lost 15-20% in this market.

    Now I know the auditors site has traditionally been low in their appraisals to keep taxes in check…but even they have the house valued at $121,000 for tax purposes.

    The last time the house sold was 2002 and is sold for $135,000…and that wasn’t even the height of the market like it was in 05-06…..

    I just don’t understand how this appraisal could’ve come in so low…now I feel as if we didn’t get a deal at all…I mean it’s even a foreclosed home!

    I have heard that appraisers often “say” the house is worth only slightly more than what the house is selling for, so as not to create any problems between the buyer and seller. For example, the seller wants $110,000, but then the appraiser says the house is worth $170,000…the buyer then might say they don’t want to sell for $110,000 anymore. Is there any truth to this? Do some appraisers go just a little above the selling price?

    Any information you could provide would be appreciated…I’m just a little upset as I feel like maybe the house isn’t worth what EVERYONE else thinks it is, and therefore maybe we overpaid…


  132. Dan Connolly says

    The problem that we face today is that there is no system of checks and balances in the FHA appraisal process. What gets past one FHA appraiser can be stopped cold by another. I have see homes with no appliances appraise and others are required to have appliances installed prior to closing. They may or may not pass it, and if they don’t, that will be difficult to get past, the review process rarely turns over any decisions.

  133. Gayam Walter says

    I’m purchasing a small 1000 sq ft townhouse in a pleasant complex-built in 1985 and generally in good shape for the age of the building. I’m applying for an FHA loan. The condo has nice floors, new carpet, new windows, new HVAC and water heater. The problem is that the building has settled. A closet door in the kitchen rubs over an uneven spot on the floor and the floor dips slightly. It’s built over a crawl space. I paid for a home inspection and the inspector went into the crawl space taking pictures and noting that there was a floor jack under the building. It’s oviously uneven. Will this pass FHA muster?

  134. Glenn Tunnero says

    I am a loan officer trying to do a FHA Refinance in Hawaii, the property in the rear 2 bed 2 bath that is unrented and done in a workman like fashion is not permitted, The borrower is 73 so will FHA insure property as an FHA Refi or A reverse mortgage

    • Dan Connolly says

      Sorry Glen, I really don’t have any experience with reverse mortgages. I think that technically the work should have been permitted in order for it be considered, but whether or not the appraiser picks up on that is up to the luck of the draw. With the reduction in fees that the appraisers get with the HVCC rules, we see some that you have to wonder if the appraisers even went inside the house. I can’t really answer your question though in relation to reverse mortgages. As far as I know, a 73 yr old could get an FHA loan as long as the income and credit were there.

  135. says

    My house was inspected through FHA for a loan last week. loan officer told me appraiser mentioned on appr. report that I have a broken window & security bar on the windows, that is not allowed by FHA therefore the bars need to be removed. The broken window i can fix but I dont want to remove the bars i think will cost too much the windows had keys but i lost them. Iam trying to figure out how to get keys for the bars but dont know if its cheaper to buy new locks? If i get bars with keys will my house be FHA approved?

    • Dan Connolly says

      I think that the keys won’t help. If you don’t have the key and there is a fire you could be trapped in the room. If the lock has a single deadbolt with a turn handle on the inside, they may let you get away with that. It’s up to the appraiser and they don’t seem to have a universal approach to different issues.

  136. Mike G says

    FHA appraiser has a comp that is only several blocks away; it is a house that was purchased by government agency for Section 8; purchase was from a HUD foreclosure. Appraiser says that he can’t use that as a comp but won’t give a reason. Can you advise. Thanks.

    • Dan Connolly says

      I am unfortunately at a loss to understand why the FHA appraisers do what they do. Some folks are upset that they use recent foreclosure sales as comps because they are generally under the market. There are many reasons why an appraiser won’t use a particular comp. It is supposed to be similar, so if it is substantially bigger or smaller, if your house is newer and the comp is much older or vice-versa, if the comp is a brick ranch and yours is a craftsman’s bungalow, things like that will make them look for other comps.

  137. george rushing says

    i have a question regarding an fha appraisal on a manufactured home i wish to purchase in florida. when the appraiser is listing comparable sales in the area. how far back is the appraiser allowed to go when checking recent sales in the area. is it 30 days, 6 months, one year? and what distance do the comparable sales need to be from the home. thanks

  138. Dan Connolly says

    The appraisers have lost it. I think it boils down to the fact that if they make a mistake they could be fired and therefore they are making some bad calls. It doesn’t impact them if they under appraise, only if they over-appraise. If an appraisal is reviewed and the findings are challenged, the appraiser might lose his job over a bad call, so the review appraisers are reluctant to reverse any of another appraiser’s calls.

  139. Teresa Bell says


    thank you so much. As for the porch, it is on a concrete slab, insulated, completely finished with paneling, heat and no door between it or the rest of the house. More like a family room.

    It was done with a permit.

  140. Teresa Bell says

    I just had an appraisal done on my home for a reverse mortgage and they sent out an fha appraiser. Extremely low appraisal. He said that since my grade level only has one bedroom he can only have square footage for that one bedroom. The other 2 bedrooms are in the basement. Also I have an enclosed front porch that is completely redone to be a family room with heat and insulation and no door between it and the rest of the house. He said this also cannot be counted as living space. We are extremely confused. Also what constitues a bedroom, just having a bed in it? Because we could put a bed in the enclosed front porch that is now a family room if that would make it living space and another bedroom. The house also has a family room and bedroom and full bath in the basement, which I was told doesn’t count because it is below the upper grade. It is basically a split level home. At one time the basement was a drive under garage. It has been completely finished into the above mentioned rooms. Could you give me any input. We are totally confused. We actually have a 1700 square foot house and he is saying it is a 780 square foot house with 1 bedroom and 2 baths.

    Any help would be greatly appreciated.

    Thanks in advance

    • says

      It is normal for appraisers not to count finished basements as part of the overall square footage. Below grade means below the ground, even if it is just one wall that is below ground.

      In terms of making a room into a bedroom, it has to have a window that opens (for egress in case of fire) and a closet, and a door that separates it from the rest of the house.

      Did you ask why the enclosed front porch was not counted? The only reasons I could imagine was if the work was done without permits, or if the porch was on posts so the cold air could get under the floor.

  141. Dan Connolly says

    I would always recommend getting your own inspection. Appraisers don’t generally crawl into the crawl space or go into the attic, you need to know what you are buying.

  142. rich g says

    could you please telll me if the fha appraiser come to to appraise a home you are buying and done,should i get my own inpector to inpect for me again or just believe what they say

  143. says

    Thanks Dan, I actually came across the same web page in my google search right before I came back to see if you replied. We aren’t scared of the mold, just the appraiser finding it. It is being caused by the insulation covering the vents to the outside. Very easy remedy. Our loan officer and Realtor both said what you said, they wont look up there(most likely).

    Thanks for answering my question, over a year after your original post. You are so nice to help all us confused home buyers find answers!

  144. Sharon says

    I am only 8 days away from my close date. My lender has been *very* difficult to work with and I can never get them on the phone. They swear my FHA appraisal was done 3 days ago, but I have yet to get a report and the rare time I get through to anyone on the phone there they say “the report is coming, we should have it end of day today or first thing tomorrow”… and I’ve now heard that 3 days in a row, but still no report.

    Is there any way to find out who the appraiser was who did the report and try to contact them directly to find out when I can get it? I am VERY concerned because I have very limited time (and money) to do any repairs and it’s making me crazy that I don’t know what this particular report will require.

    Any way to find out who the appraiser is directly through FHA and get info on the report without having to wait on my slow-as-molasses (and much harder to reach!) lender?

    Thanks for any advice you have!

    • Dan Connolly says

      Ever since the HVCC (home valuation code of conduct) passed at the beginning of this year, the appraisers and the lenders and the home buyers are not allowed to talk. I don’t think you will be able to find out how to contact him. Not through normal channels, anyway.

      It’s better to just wait for the report to come back. Because of the large number of people trying to get in on the tax credit which is still expiring at the end of Nov. the appraisers, underwriters and lenders are slammed. When you push, sometimes they move your file down in the stack just out of spite. You will accomplish more with honey than vinegar!

  145. says

    I have another annoying question… We just had our home inspection last night. In the attic on a very small part of the eaves there is black staining(the inspector said he was pretty sure it was mold). We have a FHA 203K loan. Does mold automatically mean the loan will be denied or would we be able to clean it up after closing? It is bank owned and sold as is.

    • Dan Connolly says

      Look at the EPA’s report on mold in the home and you will see that the solution for most mold issues is stop the leak and clean with bleach. The dangerous type of mold is not generally caused by rain leaks, but by plumbing leaks that never dry out. Most appraisers don’t look in the recesses of the attic. If they do someone will have to clean it.
      Read the EPA’s report and don’t fall for the hysterics of the people who make their living scaring people about mold.

  146. Heather says

    We are looking to purchase a second home using FHA lending and we found out there is an exhisting FHA appraisal already on this home. The appraisal states that the roof needs to be replaced. Some shingles are starting to curl, but the appraiser that we sent out there believes that the roof does not need to be replaced. We are bound by the existing appraisal. Can we contest their roof recommendations?

    • Dan Connolly says

      You can contest that, but you will probably have better luck asking the seller to replace the roof rather than getting an appraiser to change his mind. In my experience that rarely happens.

      I would tend to agree that curling shingles are the signal that it is nearing the end of its useful life. In this market we are seeing sellers agreeing to this type of concession more and more.

  147. Dan Connolly says

    Typically they require a stove and if there is a spot for a dishwasher, or a vent hood and one is not there, then they require that those appliances be replaced. The pool would be checked for being in normal working condition and that it is protected by a fence.

    Again, I am not an appraiser, I am a Realtor, so this is my opinion as I understand it. No guarantees that they will not find another issue.

  148. Sherene says

    I am seeking to buy a house through a FHA loan. There are no appliances in the home, what are the required appliances that a home must have in order to be approved through FHA? Also, the home has a pool, what will the appraiser check for in the pool?

  149. says

    hi, i know that you are guys are a little annoyed with all the questions but i need some insight if you have any to offer.see me and my husband are trying to buy our first home and to make a long story short the listing agent is saying that the home wont pass fha.i dont get it because the home is in prestine condition. he says its due to the finished basement , as it has rooms down there with the hopper,push out windows…that if something like a fire occured no one would be able to get out.but there is a door to the bulkhead so im lost and wondering if there are any suggestions on what i should do or who can help.i dont want to lose my dream home after going through so much to find it.thanks alot for any help! FRUSTRATED SARAH

  150. Mrs. Carito says

    I have one better for all you. I had an FHA inspection supposedly done several times over only because I pointed out obvious issues such as:
    -water in basement
    -gas smell

    Guess what?
    -piece of roof was off the day we moved in
    -basement flood pretty bad when it rains ruined all of my extra carpet I had down there and i am allergic to mold
    -I have severely damaged walls
    -I am running on 60 amps and should have had a fire long ago I was told my electrician
    -my gas furnace got red tagged
    -no air and no screens (didn’t even know that was an issue)
    -hot water tank broke within 3 months
    -floors are ready to fall through
    -room from floor to celiing in basement full of trash including but not limited to pipes and fiberglass and bats
    -plenty of broken steps on porch and broken sidewalk (didn’t know that was an issue
    -broken window in basement
    -the list goes on

    Think I have a lawsuit? lol I am sitting here with no hot water or heat.

  151. Nicole says

    My husband and I are trying to get an FHA loan on a small, 5-acre farm. It has a house and a pole barn. Our bank took our $400 for the appraisal and told us they were not allowed to communicate with the appraisal company or even select them. The appraisal was done and came in below the selling price. The seller agreed to take the appraisal price. We were waiting for a closing date when our bank called us and told us the FHA underwriter suspended our loan because she did not agree with the appraisal. We were told by the bank that the FHA has a new rule and does not loan on pole barns. So, the underwriter subtracted the appraised value of the barn ($20,000) from the appraisal price. We were told by the bank that the FHA has now entered that new price in the system and we cannot go anywhere else and get a new price. The seller does not want to accept the new appraised price because it is now $20,000 less than the agreed selling price. No one will give us any clear answers on why the FHA underwriter did this or how they can determine a new appraisal value sight unseen. Needless to say, my husband and I are very upset over this. We basically paid $400 for someone to screw up our dream of owning our own little piece of America.

    • Dan Connolly says

      Is there some reason why you couldn’t get a conventional loan on that property? The FHA appraised value won’t necessarily prevent a conventional lender from making a loan on the property.

      I am thoroughly disgusted with the way the FHA underwriters and appraisers are able, in many cases, to make arbitrary decisions that cannot be appealed. Well they can be appealed but it won’t go anywhere. I think that there is a code of silence amongst the underwriters and none will challenge the other because they know if they were found to be in error they would be fired.

      The problem is the same inmates that got us into this mess, are in control of the asylum. The idiots that started this meltdown by making loans to unqualified people, are still running the show. Their solution is to threaten every underwriter, appraiser and loan originator with their job over every decision. So they are all running scared and making what turns out in many cases to be unreasonable decisions.

      • Nicole says

        We were told that even if we went conventional, the price would still be 20,000 less because of what the FHA underwriter did to the appraisal. Basically, since the FHA underwriter put their own value on the property and entered it in the “system,” it is now that price no matter where we go.

        • Dan Connolly says

          Again, I am not an appraiser, but I don’t think that appraisers for conventional loans look at the FHA appraisal record when they are appraising the house. Who told you that? Your FHA lender? Again is there some way you can go for a conventional loan?

  152. Amie says

    I am purchasing a home with and FHA loan and have already gone throught the first inspection, to which we recieved a list of things needing repaired. We have finished all the repairs, but when the appraiser came back out for the final inspection he came up with another list of items to be repaired! Is this allowed? If he missed it the first time how can he come back with it the second. We were told the second inspection was just to check that the work needing done was completed not to find more problems. What can we do here?

    • Dan Connolly says

      Unfortunately there is not much you can do about that. I am sure that their position is that if the items need to be done, they need to be done and the fact that the appraiser missed them on round one won’t matter. Can you get the seller to do or at least pay for the second round of repairs?

  153. Dan Connolly says

    While you may have had that agreement before the closing, the closing normally has documents that state clearly that the seller is not responsible for anything after the closing. That is what you should look for, see if you signed that type of document. I really don’t think you have any recourse with the Seller. You should show your documents to an attorney if you want to really know the truth of the matter,

    It sounds like your Realtor did the right thing with the warranty. I would think as long as you renew the warranty on the anniversary date you should be protected even if the heat pump breaks again.

  154. says

    sorry to be a pain no they ddnt fix because house had closed my realator paid my warranty the 50 to fix she thought it had already been fixed from main realtor if my heat pump goes out for winter the warranty only covers 1 main part heat pump it would not be covered again kind of make sense. we were home when the airconditioner mechanic came to fix only to call his boss which he was working for the main realator to say house had closed and was unable to fix offered me a price still thought if paying for a fha loan thought heat pump was suppose to be in working condition upon move in any response again helps wont bother you again on this matter thanks for your help

  155. says

    hi im i in the wrong to wonder why after i closed to have a repair man at my house to fix what was said to be wrong the heat pump,to find out it was not working upon move it was not working from inspector but second releator i think wanted to close before end of year could they make me think its working as they did to have me close on date even though there was a work order out to have the heat pump fixed is this a fha home matter i dont know any ifo let me know thanks

    • says

      can you help me on this matter or info from you or others has my time ran out to file a claim i dont want to file a claim i just want to know what is right from wrong thanks.

      • Dan Connolly says

        Normally when there are repairs that were supposed to be done before closing you would either go and reinspect before closing to make sure that the work had been done or there would be a receipt from a HVAC repair company stating that the work was completed. I wouldn’t count on the fact that the appraiser had checked. The appraisers are independent and are not working for FHA, by the way. They don’t have any gauges or equipment to test whether the systems are working correctly, and again, it may have come on when the appraiser was there and not worked when you closed. That last minute check is the responsibility of the Buyer.

        So when they came back three days later did they fix it? I suppose they charged you since they said that it wasn’t the seller’s responsibility any more. In most cases when you are buying a foreclosure you sign documents that state that it is as-is and that you do not have any recourse after the closing. That is why you need to have an attorney look at your paperwork. It may turn out that you have signed a document that states that you agree that you are accepting the property as-is.

  156. Brandi Warren says

    Hi Dan, (and FHA Cert. appraisers??)

    I am buying (or trying to buy) a short sell home that has become a nightmare. I offered 25K less than the asking price, which is more than 35K less than the liens. It seems like a very fair deal. It has a new roof, water heater, yada yada yada – great shape. I am going FHA as a 1st time home buyer and didn’t realize the hoops that I’d be put through for doing so.
    This homeowner, not being mine, let a friend use the back property to operate a construction business, park his equipments, bring in fill, etc. Store rented and inspected diesel tanks. The FHA appraiser came and paniced! SHe rejected on several accounts. I got an environmental engineer who had a great head on his shoulders and came out and did an inspection. He deemed it to be fine, as the tanks were gone by this point and they were the oil company’s to maintain so they were. Thank goodness there!
    Anyhow, I need to paint the deck and unscrew the crawlspace door, as it was unaccessible. I want get on my soapbox about wood not being there if paint used was from 30 years ago or the one about common sense items being a screwdriver. I just wonder about the crawlspace. The realtor responded when I told her of the approval and coming back to finish appraisal that I had to make sure the entire area was covered with plastic for a vapor barrier. Since I’ve done most the leg work on this myself, the info. that I’m finding says only if water pools; otherwise, a barrier is not necessary. THe house sits on a hill with great drainage and there is no water anywhere that I’ve seen. Could you tell me if this is really necessary since I seem to be playing realtor also here?

    Thank you,

    • Dan Connolly says


      Every inspection I have ever been to (close to 700) the inspectors all say that there has to be a vapor barrier regardless of the elevation of the property. It keeps moisture which is in the soil from getting into the crawl space and growing mold.

      • Brandi says

        Hi Dan,

        Thanks for the real person info and getting back so fast. I was afraid that the web data may not have the whole story. I am writing now to ask if you know anything about the deck paint request. I have it scraped, pressure washed and clean -ready for the stain/sealer. It has been raining here, forecast to be raining the rest of the week and the deck is wet. The selling bank said that we have until the end of Oct. to close. I am afraid of waiting on the deck to dry for paint and not making the deadline. I also know that it won’t stick painting/staining it wet. Will the bank/appraier accept the bare clean deck for the inspection with term of paint by closing? Is there anything that I can do in this situation?

        Thank you again,

        • Dan Connolly says

          In my experience if the appraiser asks for something then it has to be done before closing. I have had them come out to check the morning of closing. I think you will probably have a couple of dry days before the end of October, don’t you think?

  157. Steve says


    My wife and I are first time home buyers applying for a FHA loan. Our offer was already acccepted and home inspection complteted. The house needs some repairs… it needs new windows (none broken just have wood rot), and evidence of water in basement with minor mold on drywall..The seller is giving us a credit towards the windows and basement water sealing.

    Our main question is whether we should go with the traditional FHA loan or the 203k FHA loan? If we go with the traditional FHA loan we are cconcerned that the appraiser will require us to do all of repairs before settlement whicch will not be possible for the larger priced items, but we do not know how many items would need to be fixed beforehand. Also, oncce you choose the FHA traditional can you still have the chance to get the 203k if needed?

    • Dan Connolly says

      Look for a lender that has both the regular FHA and the FHA 203K loans. Then, if the appraiser asks for repairs with the regular FHA loan, you should be able to switch to a 203K using the same appraiser. Discuss that possibility with the lender before you decide on a lender

      I would work on getting bids from a lender approved contractor in the meantime so if you have to switch you won’t lose too much time. The 203K process takes longer, so you have to make sure you have enough time to get the loan (in the terms of your contract). You may need to ask for an extension if you end up having to go that route.

  158. Dan Connolly says

    I don’t really understand what your bank was trying to tell you. With either an FHA or Conventional loan, if the property does not appraise, the choices are for the Seller to take the amount that it appraises for, or to try to appeal the appraisal. Generally both conventional and FHA appraisals are hard to appeal. In my experience, FHA appraisers rarely will change an appraisal. I have heard that it stays on their books for 6 months so anyone trying to get an FHA loan will have to use that value. Conventional appraisers are a little more flexible and occasionally they will rework the value, but not very often.

    At that point renegotiating doesn’t have much to do with the type of loan you are looking for, but the amount that the Seller owes and if they can afford to drop the price. A lot of people have first and second mortgages to pay off, and can’t take less than they are asking. It varies from person to person and really doesn’t have anything to do with what type of loan you are trying to get.

    The only other option is for the buyer to pay the difference between the appraisal and the sales price in cash. The house only has to appraise for what you are trying to borrow, so if you want to pay cash for the amount over the appraisal you can (but not many people do).

  159. Tennille Wasek says

    Just starting the mortgage process. A bank told me yesterday that if I did go with an FHA loan and the home we are trying to buy appraises for lower, with an FHA loan it might be harder to renegotiate. Is this true?? I think this home might be worth a bit lower which would help us out if we could pay a little less. I just need to know if an FHA loan really plays into this vs. a conventional loan. I want to feel good that the loan we choose will help us, not hurt us.

    • Dan Connolly says

      Sorry, I have been swamped with business, vacations and my own long case of the flu (not swine). Plus my blog stopped sending me emails notifying me of new comments. I have fixed that so hopefully I will be back on track answering questions.

  160. says

    Hello, i have a FHA buyer that aquired a beautiful forclosed home. The pool is not filled, pump is also missing. We also over bid on the home. My buyer is willing to make the FHA required repairs, contingent on him getting the home at the appraised value. Do we have a good chance.

  161. Chris says

    Hi Dan,

    There are a lot of interesting comments concerning FHA Appraisals. When appraising the value of properties, I understand that MANY, and I mean MANY comps in several areas are foreclosures, which in my opinion is not the TRUE VALUE of what the home is worth because many of these homes are purchased by investors, not primary home owners. When it comes to appraising the value of a home, do FHA appraisers take into account repairs and updates such as a new HVAC system, new windows, new carpet, new paint, and several other items that add value to the property not to mention the size and condition of the yard as well? I agree with ROSE and KRISTI above about how bad the government has gone overboard because they had their homes appaised by a professional who came back with a fair and close appraiser based on the agreed contract price but FHA comes back with a $40,000 less amount, which makes no sense and is a major drop. People are going to continue to let their homes go into foreclosure if they try to sell and the govt. tells them that their homes are worth $50,000 less that what they owe. Washington needs to wake up and become practical, balanced, and realistic to keep the economy from damaging even more. Here is another question; Suppose that a home is 1,400 sq. ft. and is listed for $100,000. How do appraisers of FHA go about coming up with the true value if 1. most of the homes sold in the area in the last 12 months are 900 – 1200 sq. ft, which averages around $58,000 – $95,000, 2. you have 2 homes that sold for $69,000 that had over 1400 sq ft but also had 3 properties that sold for $95,000 to $115,000 with about 1,300 sq ft with 1/2 to 1 bath less? I asked these questions because it appears that FHA is not allowing TRUE and REASONABLE standards by allowing foreclosed properies count, which is not the true value of the property. Just because a bank wants to clean up its balance sheet and sell a home for $45,000 below tax value does not in any way justify appraisers coming in and saying, ‘hey, your home is only worth $73,000 due to other comps in the area,’ when in fact most of the people in the area paid a solid and fair price for their homes though appraisers are trying to protect their jobs. I thought appraised properties were based on “WHAT HOMES IN THE AREA SOLD FOR BY HOME OWNERS, NOT INVESTORS OR DUMPED BY BANKS TO CLEAN UP THEIR BALANCE SHEETS. The last question is this; how many comps do FHA Appraisers have to submit and if they do not have enough comps in the area to match the selling property over the past 6 months or so, esp. when it comes to total sq. ft, are they allowed to use other similar homes in the area that have about 200 sq. ft less but sold for only $10,000 less or in some cases 300 sq ft less and sold for $15,000 more? What I am getting at is where is the silver lining for looking at comps that are 200 – 400 feet less, which sold for $15,000 less to $10,000 more of your asking price vs. 2 comparable properties that sold for $40,000 less than what you are asking for due to foreclosures, plus these foreclosed properties were in pretty bad shape when sold? Do the appraisers look more at the total sq. ft, condition and safefy, updates and repairs such as (NEW HVAC, NEW WINDOWS, and other major updates), age of home, or some other variable to come down to the final and true value? I know a lot was said and asked. Thanks for your input and I hope that FHA will come back to the right or the middle like the credit crisis had to in order to be balanced and just. Hope many people like Kristi, Rose, and others know that I am on your side and we are practical, realistic, and fundamental. The system needs fixing again or we will never come out!


    • Dan Connolly says

      I agree that the system is broken and doesn’t make sense. Remember that I am a Realtor, not an appraiser, so I can’t answer the technical questions with 100% accuracy.

      As I understand it, the foreclosures being dumped by banks are not comps for well maintained homes being sold by regular people who pay their mortgages as agreed.

      Condition plays a part, but appraisers don’t necessarily give credit for every improvement, even in a normal market. You understand that they don’t get to see the inside of the comparable properties so it is somewhat of a guessing game as to the condition of the comparable homes. They categorize properties as: poor, average, good, very good and excellent, but don’t break it down to the details of the improvements.

      What is really happening is that the banks are over-compensating for the mess that they are in by threatening the underwriters and appraisers if they make a mistake. So we are getting a rash of appraisals that are just plain wrong. The victims are the homeowners and borrowers, and the only solution is to try to get your elected officials to repeal or rework the Home Valuation Code of Conduct, which is the new law (Jan 2009) that has gotten us into this prediciment.

  162. says

    closed on dec 30 2009 with fha loan inspector said heat pump was not working realtor said it was fixed upon moving in moved in on dec 31 as to come was an air condition service company was at my house to fix but only said house had closed so they were unable to repair realtor paid the 50 dollars for my home warranty to fix i was still out of heat for days till it got fixed i thought a house is not allowed to close with fha unless heat air is in compliance with fha laws.

    • Dan Connolly says

      I guess you mean that you closed in Dec 2008?

      The heat and air have to be working when the FHA appraiser looks at the house but they could break down on the next day. (Murphy’s law).

      There is generally no warranty on anything from the Sellers and you probably don’t have any recourse, but that could best be determined by an attorney familiar with real estate law in your state.

      • says

        thanks for the info did close in 2008 I’m going to try a lawyers info dont think i shouldve been without heat upon moving in as a repair man came three days later to fix and said house had closed it was not there responspility to fix the 1st place it was two realeators in the same deal mine thought it had been fixed no response she said from original realetor but he sent his help out to have it repaipered three days later to fix doesnt that say it was never repaired

  163. KEVIN L OMEARA says


    On an fha appraisal- the date of the settled sales used can be back as far as 60 or 90 days ?
    thank you

  164. Kristi says

    Hi Dan,

    I’m guessing this thread has been kept alive due to the current market!

    I have a somewhat similar issue to Rose, above, in that our appraisal is being questioned by the underwriter, weeks after the appraisal came in. The kicker is that this was an FHA appraisal arranged by the bank loan officer himself (we weren’t given an option as to who we’d use) and it came in for the same amount as what we offered. Now, at the 11th hour, the underwriter is saying comps in the area warrant a lower price (apparently considering the FHA appraisal about $30-50K too high, and not considering the state of the other houses and the value of the well-taken-care-of house we want to buy). The sellers are not willing to come down in the price, which we thought was fair in the first place. Do we have any recourse? Any suggestions?

    Kristi in Southern California

    • Dan Connolly says

      I don’t think you have recourse. Unfortunately the Sellers are often upside down or under water with their loans and would have to write a check in order to sell for less than they are asking. Their only other option would be to try to convince their lender to do a short sale, and that might be a way to handle it, if you have the time to go through the process. Unfortunately if the Seller is paying their mortgage(s) on time it is difficult to go that route.

      The only other option might be to try to go with a conventional loan and a new appraisal.

  165. Karen says

    Can anyone explain this one? We are selling our condo and the buyer is going through FHA. The appraisal came back $2000 ABOVE our sales price.

    However, according to our realtor, “Yesterday FHA determined that your condo association was in a declining market. They countered the appraisal at $X with you still paying closing costs. ”

    Does this make any sense to anyone? Has anyone heard of this happening?


    • Dan Connolly says

      It is a new one for me. The lending industry is changing on a regular basis. It’s difficult to know what they are going to do. I had a house that we had a contract on that appraised for 45,000 more than the sales price (sales price 135K appraised at 180K) and they turned us down. That was a conventional loan and the underwriter said it proved a declining market. (FHA made the loan on that one). Appraisers and lenders are running scared. We hear stories of bizarre treatment on a daily basis.

  166. Rose says

    My husband and I are in the process of buying a home with an FHA loan, and had gone through all the stages, paid for our appraisal, which came back exactly what our bid was. However, the bank decided they wanted to do their own appraisal, which came back 40k less than what our bid was, and now won’t loan us more money than what they believe the house is worth. I remember hearing that once an FHA appraisal was made by a bank, the house cannot be reappraised for 12 months, is this correct? Also is it only for FHA buyer or for those with conventional loans as well. I am hoping they cannot change the appraisal for all loan so we have more leverage, but who knows, we may just lose our dream home.

  167. alex says


    I am buying a bank owned(forclosure) and am getting FHA finansing.
    The house is missing one sink , toilet, range. And oddly the SMUD electricity meter outfront.Carpet is a mess , and a few holes in the dry wall. Fireplace is missing parts. And some interior doors are also missing .
    My offer was accepted , however the bank said they will not make any repairs.
    And they want close of escrow in 45 days and a 3500.00 deposit.

    Would I have to replace or repair all of this to close fha??

    Many Thanks


    • Dan Connolly says

      Again, I am an agent, not an FHA appraiser. The way it works generally is that the utilities have to be on for the appraisal and anything the appraiser asks for has to be done before closing. You would have to check to see if your offer is contingent on appraisal and if there is anything in your offer that addresses the issue of FHA required repairs. Your contract will control the way the repairs are handled. If the bank sent back an addendum for you to sign, that normally that will supersede anything in the original offer that conflicts with the addendum. Most banks won’t do repairs or allow you to do them prior to closing, but again that is a issue that should be addressed in the contract and addendum.

  168. Dan Connolly says


    I don’t know the answer to that one. I think (just my guess) that they will want the mold removed prior to closing. Maybe one of the licensed FHA appraisers who have been commenting will chime in?

    Your contract will determine what you are required to do and what you are not. In Georgia we have a FHA exhibit which addresses those issues. I have heard that these are not national forms but forms specific to GA. In our exhibit there is a line about who would pay how much towards FHA required repairs. Read the contract an if it doesn’t address the question at all, I would take it to a lawyer specializing in Real Estate law in your state.

    My question is how do you know that the three FHA required repairs are really required if the appraiser did not come out yet? Normally that is where you hear whether or not the FHA will require repairs? Did the inspector tell you what the FHA requires?

  169. says

    My husband and I have a closing set for July 31st. Before this closing, we moved 2000 miles away, closing fell through, and so we moved back (long story). We’re being extra cautious when it comes to moving/renting a plce this time. The Buyer is using an FHA/VA loan. The inspection went really well. The Buyer is buying the house “As Is”, with the exception of 3 required FHA repairs, which we are willing to fix.

    Next, we have an FHA appraisor come out. What happens next? Are we required to fix what they find or is the Buyer? Is there a report that we are offered (like a counter offer), suggesting items to fix? We just don’t want to get stuck fixing items that we absolutely can not afford. We have like $100 to our name due to our huge move back from Arizona. Our realtor never gets back to us, probably because he doesn’t know the answer.

    Tiffany/Knoxville TN

  170. Michelle says

    I am purchasing a home with mild mold damage. I just got a mold inspection report. I am financing a FHA loan. Will this have to be repaired before closing or can I sign a waiver stating I am aware there is mold and I will be fixing the problem and buying the home as is?

    Thank you.

  171. Dan Connolly says

    We see this over and over. It is not fair at all, in my opinion. I think that there should be a review process but I don’t think that there is one. The appraisers have their license to do FHA appraisals on the line with each appraisal that they do and they are being extremely careful. I think that the fundamental is that the recent mortgage meltdown was caused to a great extent by appraisers who weren’t doing their job correctly and who were “in bed” so to speak with the lenders and borrowers; so now they have over compensated to try to correct this.

    When you say that you have comps, it is important to understand that the comps have to be very recent. If there are comps with similar property near the subject and within the last 6 months or even 3 months that support the price the appraiser found, then you can’t go further away, or into different subdivisions, or further back in time to find comps to change the value.

    The other thing that I wonder about is the market appraisal that you got. If that was done by an appraiser or a Realtor. Because Realtors are not held to the same standards as licensed appraisers sometimes the market analysis that they provide falls more into the category of wishful thinking.

    Why they won’t let you see the appraisal is because it is paid for by the purchaser, so they technically own it. Sometimes the buyers will get a copy at closing and will let you look at it, but they don’t have to.

  172. Janice says

    We had a market appraisal done in March order to get information to appropriately price our home, and got an offer for what we were asking. Our tax assessment was redone around the same time and it was within $2000 of the appraisal in hand. We felt pretty confident that we had a good picture of what the home was worth.
    Then the FHA appraisal came in a whopping 20% lower just two months later in May of this year. We supplied our appraisal and contested the comps (it appears they used at least one foreclosure or short sale, which I didn’t think they were supposed to do)- but were unsuccessful in our appeal. We were told this appraisal was now going to be the official FHA value for the property for the next 6 months, no second opinions. We couldn’t just take our home off the market and refusing FHA financing would have cut out about 75% of the buyers in our area. (It was interesting that they didn’t require any repairs or anything- the home is in great shape, we took excellent care of it- FHA just trashed the value and we lost a ton of equity.) We swallowed hard and took the deal, because it made us feel like if the government was saying this about about our neighborhood, it would only get worse.
    I understand and that appraisers are working for the lender and all that, but my question is this: Why wouldn’t they let us see a copy of the appraisal? Why couldn’t we order another look? It was our property after all, and here is a government agent dictating our deal without letting us even see what we were up against. That just doesn’t seem right- it seems as if we should be entitled to see this document. I looked all over the FHA website for some guidance about this but there’s nothing about appealing this decision. Can you fill me in?
    Janice in Memphis TN

      • Dan Connolly says

        It actually makes it easier because FHA loans can be assumed if the new buyer qualifies and they will probably never see interest rates this low again!

  173. Tresa says

    My client is buying a home (FHA loan) that has an empty pool. Will there be problems not passing FHA? If answer is yes, what condition does the pool need to be in?

  174. Steve S says


    Just to get back to the original post:

    Measurement standards are not left to an appraiser’s discretion, so I doubt the appraiser was being ‘inflexible’. The standard for measuring and determining Gross Living Area (GLA) is defined in the ANSI Z765 standard. I suggest people Google it if interested.

    Rooms below grade, even if they are only 2 feet below grade, are not counted in the GLA. Homeowners get upset with appraisers for not counting their basement bathrooms and bedrooms in GLA or above grade counts, but the standard does not allow for it.

    Hope this was helpful.

    Certified FHA Appraiser in Illinois

  175. says

    Hey Scott! Thanks a lot! That helps quite a bit. I started to feel like I was getting on thin ice with very specific questions about FHA appraisals, I know the guidelines are changing quickly as the market meltdown continues, so I appreciate the clarification.

  176. Scott says


    The roof has to have 3-5 years of remaining life. A certification from a licensed roofer should be enough for the appraiser. (Check with the individual appraiser)

    Any room additions should have permits or not be included in the value of the home. The appraiser could require permits or just turn it down for FHA financing.

    Shouldn’t make a difference I would just value it as not having A/C.

    Dan is correct it would be a functional obsolescence issue unless having a kitchen in the basement is typical for your market area. There would have to be comps with the the same ammenities (Kitchen in basement).

    Hope this helps.
    Certified FHA Appraiserin Oregon

    • Regina Harra says

      Hey there,
      I am in Medford, Oregon and just got approved for an FHA loan. I am trying to find a home and close within two months :) I may have found the house I am looking for. Although it was built in 1965, it appears to have been COMPLETELY remodeled inside with new vinyl windows and garage doors and whole new kitchen and bathrooms. The roof also looks new (I’ll get all the specifics when I view with realtor in a couple of days). The house only appears to be needing exterior paint and landscaping. The neighborhood isn’t perfect. The house on one side is comparable and sold last year for $145k. The house to the right is also comparable and sold a week ago for $185k. The house I am looking at is listed for $169K. Our area was hit very hard in the housing bubble burst and has recently picked up a ton in our area in this price point. I am hoping it appraises out. Is there anything I should be looking for specifically, in your opinion, so that I don’t waste time or money in my search. Also, I was thinking about including in my offer, asking for a paint/landscape allowance from the seller. Do you know if FHA loans allow that? Does the seller knock that off the puchase price or cash out at closing so I can do the improvements?
      THANKS for your time and input!!!

      • Dan Connolly says

        Hi Regina,
        Scott is another reader who answered you on your last question, so he won’t be notified of your question on my blog. Maybe he will see it and answer, but just in case that he doesn’t, I will give you my opinion. :-). You should ask your lender if they will allow any escrows for improvements. Most do not. FHA does have a rehab loan but normally it costs a bit more in the interest rate and closing costs, and takes longer to get approved. It is the 203K loan. Not all lenders who do FHA loans also do 203K loans. But in terms of what you shold be looking for, it is mostly items that need repair or are safety issues that will stop the sale. Then, the seller would have the option to do the repairs before closing and then the sale could proceed. You could ask your Realtor and lender as well.

  177. says

    Tammy, I am not an FHA appraiser so I can’t answer specific questions about the process. The point of my article was that if a home isn’t in pretty good condition, your appraisal money may be at risk.

  178. says

    Is is possible to buy a house with room additions that doesn’t have city permitts and still qualify for a fha loan? Why?

    Does a pool have to have city permitts to qualify for a fha loan?

  179. Dan Connolly says

    Hard to answer that, with so little information. Asbestos, mold and abandoned oil tanks all have the potential for being really big problems. I would get professional advice from experts in those three areas.

    If the seller gives you a credit and lowers the price, do you have the money to get it in healthy shape? Is the property worth what you will have to pay to buy it and then get it into good condition? Are you willing to take on the task?

    Will your lender make a loan in its present condition?

    Sorry, no answers here, only more questions! :)

  180. abiola says

    im buying a house that has all the 3 major issues wrong with it, asbestos, mold and abandoned oild tank. the seller refuses to fix all thesee problems but wants to give me credit towards my purchase price. what should i do? i dont know if i should accept the offer or back out of the contract. thanks

    • Mrs. Carito says

      There is virtually nothing you can do with asbestos that will not cost a fortune. My house has it. I made the mistake of looking into that after I bought the house.

  181. says

    Well there is no easy answer to that. The guidelines for FHA appraisal are changing by the minute. It would be a question for the FHA appraiser. The appraiser has to determine if there is enough life left in the roof. He might take the certification from your roofer and might not!

    Also, are you currently listed for sale with a real estate broker? If so you should talk to that person about the negotiations, there are rules which prohibit us from advising people who have signed an exclusive right to sell contract with another agent.

  182. Sarah says

    We are in the inspection period of trying to sell our 1926 home. The buyers requested everything, but are most interested in us replacing the roof. We have a roofer who said that $1000 worth of repairs would certify it for another 5 years. The buyers are doing an FHA loan. Will they be able to get the FHA loan if we do the repairs? Or will we have to do an entire new roof before closing?

  183. says

    Sorry Kelly, but I really don’t know the answer to that. Was there a kitchen on the area above grade that was removed? There will be some value established for this. It falls into the category of functional obsolescence. It is a floor plan that is not normal. They will probably adjust the value for that, but I don’t have any idea how much!

  184. Kelly says

    I have a situation with a house that has an improved basement area with Kitchen, living room, ect. Then the above grade level has the bedrooms and bath (no kitchen). On appraisal how would I handle this?

  185. says

    I am not sure whether the missing ac will cause it to be turned down by an appraiser. If it is, then you might be able to close with an FHA 203-K loan, which would let you borrow the money for the repairs. See if your lender has that product, the FHA 203K loan. It takes longer than a regular FHA loan and whether or not you can get the extension from the seller is another big question.

  186. Araceli says

    Dan i have a question i was trying to buy a house that is missign the outside part of the Air Conditioner will it be turn down by the appraiser. The mortgage company have been waiting for a answer from fha since 2 weeks ago but i really dotn trust them because she has made so many excuses for other houses i have seen can you please help me thanks

  187. says

    You could get an FHA 203-K loan which would incorporate the repair costs into the loan. Most corporate sellers (foreclosure etc) won’t let you do repairs before closing. If they do, allow it, you need to be careful because if something went wrong in the loan process you most likely wouldn’t get paid back for the work you did before closing. Also if you put in something like an air conditioner compressor, and it was stolen before closing, that would be an uninsured loss.

  188. Joanne says

    I want to bid on a property that is listed “As Is” so any repairs would not be done by seller. Would that mean I would have to make the repairs myself before closing or not get the loan?

  189. Jessica says

    I’m in the process of buying a home w/ FHA mortgage. We have to do all this work before the closing. It’s so unexpected and we only have 2 weeks to do it. I just wish this was explained to us.

  190. says

    Well although they may not seem like significant issues, apparently the appraiser thinks they are. I imagine the playhouse might be a safety issue because kids would want to play in it no matter what the condition. I don’t really understand the condition of the moldings that would require replacement, but the bottom line is if the appraiser requires it you will probably need to get the things done. Holes in sheetrock have always been an issue in my experience. I have not had much success appealing FHA appraisals.

    It’s not only health and safety, resale ability is a factor. Could they sell it if you never made a payment and they got it back quickly?

  191. Tom says

    I had an appraisal done for an FHA mortgage. Some of the things included on the items to be fixed include.
    -replacing moldings throughout the entire house.
    -repairing or removing a shed
    (this is a small childrens playhouse in the back yard that is in poor condition)
    -fixing drywall and repainting
    (small hammer hole in the drywall)
    These items don’t seem like they have anything to do with the structural integrity or safety of the home so should items liek this be seen in an appraisal report, or should I discuss this with the lender?

  192. says

    John, I appreciate your comment and sorry, I missed it when you first posted it and didn’t get it online right away.

    I think that your reasoning isn’t correct regarding the finished basement issue. As I understand it, it’s not an issue of whether or not permits were pulled when the basement was finished. Even with permits, finished heated and cooled space below grade is not counted as square footage when an appraiser is figuring value.

    When he compares value he would look for comps with finished basements and see what they sold for. Generally you will find that 1600 square foot with finished basements, sell for more than 1600 square foot homes with unfinished basements. And 1600 sq’ homes with unfinished basements sell for more than 1600 sq’ homes with no basements.

    It might work out that no basement homes sell for $150 per sq’, unfinished basement homes sell for $160 per sq’ and homes with finished basements sell for $180 per sq’.

    Dan Connolly’s last blog post..Disclosure: What the seller DOESN’T have to tell you in Georgia

  193. John D says

    Kevin-you are in a tough situation as the homeowner. Before the real estate meltdown, appraisers were able to use their personal judgement more, instead of relying on strict guidelines. Now, in the current “gotcha” climate, where everyone is looking to blame their bad decisions on someone else, appraisers seem to be the only ones held liable for any mistakes in the real estate valuation process. As such, those of us who want to stay in business and out of jail are very careful. The general rule for basements is that if its below grade, even partially, its a basement. You may have a finished basement, and you may even have permits for the finished basement. OK great. What do the public records say your legal square footage is? If public records indicate a total square footage which does not include the basement area, then most appraisers are not going to count your basement as living area, even if you have permits. We are not going to put ourselves out on a limb by obviously disagreeing with what public records say your legal square footage is.

    If you have a 1600 SF house and an 850 SF finished basement, and public records indicate your total living space (GLA) is 1600 SF, then you have a 1600 SF house with an 850 SF basement. If you disagree with this, you need to get in touch with your city building and permit department and find out why. If you believe your basement should be counted as legal living space, its up to YOU to do the leg work with your city, get them to come out and inspect and reclassify if necessary, pay their fees, and take it from there. Thats not the appraisers job. Once you have official documentation, such as a change to public records, a new permit which indicates the space is legal GLA and what the new GLA numner is, or some other such document, the appraiser is then covered, and most reasonable appraisers would then count the additional space as legal GLA.

    If you bought the house thinking it was legally 2450 SF when it really was only 1600 SF, then someone didnt do their due diligence.

  194. says

    One of the biggest frustrations in this business is appraisers who get inflexible. It is doubly hard if the FHA appraisal was recorded, it is almost impossible to get past that. Appraisers are fearing for their jobs and have gotten much more careful.

    I took an appraisal course quite a while ago and I have to say that I am not an appraiser, but I understand a little about the process. In the course they considered finished basements, but not by adding the square footage to the rest of the house, but, let’s say a 1600 square foot house with 800 square feet finished in the basement my be worth $10-20 more per square foot, than the 1600 suare foot house without a finished basement. They wouldn’t call it a 2400 square foot house. The comps would be other similar 1600 square foot houses with finished basements, and the added value may be more in line with the cost of finishing the space. The $10-20 dollar per square foot figure I mentioned is not meant to be an exact number but a guesstimate.

    Your best bet is to try honey rather than vinegar when talking to them. FHA guidelines are strict, and the appraisers job and license to do FHA loans are on the line with every appraisal.

  195. kevin mcguire says

    I had an FHA appraisal on my house.The apraiser missed 850 sq ft on the origanal measurement. After fighting with the lender ,they remeasured ,found thier mistakes, but used the same comps. One of which was almost half the size of mine. I also have an In-Law suite in the “basement”. These rooms are 2 feet below finished grade at thier lowest point ,and are well within FHA guidelines for habital space. But I am being told that company policy is anthing below grade. Am I missing something? Any input would be appreciated. thanks

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