As of March 18, 2015, over 225 existing handbooks, mortgagee letters and other policy documents were consolidated into the 4000.1 HUD HANDBOOK. This was meant to consolidate the FHA Single Family Policy to a comprehensive single source and reduce ambiguity of what a home appraiser must do.
With the new changes that became effective September 14, 2015 there is a perception of increased scope of work and liability. The perception is home appraisers are being asked to perform the work of property inspectors. As a result many home appraisers are choosing not to perform FHA appraisals or significantly increase their fees.
There are three main areas of concern:
- Crawl spaces.
In this post I will talk about the appliances.
Cabinets and built-in appliances that are considered Real Property must be present and operational.
Required Analysis and Reporting
The Appraiser must note appliances present in the house at the time of observation and indicate whether that appliance is considered Personal Property or Real Property. The Appraiser must operate all conveyed appliances and observe their performance.
The Appraiser must notify the Mortgagee of the deficiency of MPR or MPS if any conveyed appliances are inoperable.
HUD HANDBOOK 4000.1, page 485
What Appliances Are Operated & When?
If the home appraisal is for a sale then all appliances conveyed must be operated. If the home appraisal is for a mortgage finance transaction (refi) that is not a sale then built in appliances only must be operated.
In most cases refrigerators, washers, dryers and stoves are not built in appliances. The most common built in appliances are dishwashers, microwaves and disposals.
The concern is that in order to know if a dishwasher, washing machine or dryer is operational that it would be necessary to sit through an entire cycle, which we all know is at least an hour. First off there is no specific language that states the home appraiser must sit through an entire cycle and second I don’t believe that when HUD consolidated the FHA Single Family Policy they expected home appraisers to spend an hour or two at the property.
What Can You Do?
Home appraisals take about 30 minutes and the simplest thing you can do is get the dishwasher, washing machine and dryer going before the home appraiser arrives and time them so the cycles end while he or she is there.
Remeber this should only be done for the washing machine and dryer if the home appraisal is for a sale and those appliances are being conveyed as part of that sale.
A home appraiser knowledgable with FHA appraisals will not make you run the appliances as I suggested. Technically speaking the home appraiser is to operate them and observe to see if they are operable and that’s it. If they are not operable the home appraiser must report them as such.
What Can Home Appraisers Do?
Home appraisers can use common sense and simply operate the dishwasher, washing machine and dryer long enough that satisfies them so they can report them as operational or inoperable, check the dishwasher to see the dishes are clean or dirty, look to see if supply, drain and vent lines are disconnected or ask the homeowner.
My next post will address what a home appraiser must do when inspecting the attic for an FHA appraisal.
Do you have FHA appraisal questions? Give me a call or better yet I can come to your office and speak to your staff and clear up any misconceptions.
Did I leave anything out or do you want to join the conversation? Let me know in the comments below.
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Thanks for reading,