It can be very frustrating for a homeowner or real estate agent when they receive feedback from the lender that there are certain items that need to be repaired before closing. That’s why it’s important to know the FHA’s minimum appraisal standards before a real estate appraiser visits your home. The following are the most common repairs I find in the Chicago area that you should be prepared for. Many of these could be corrected prior to appraisal inspection for relatively little time and expense. This will ensure that no additional inspections are required and avoid delays related to re-inspection.
1. Chipped / Peeling Paint: According to the FHA, any peeling or peeling paint on homes built before 1978 must be corrected. That means faulty paint needs to be scraped, sanded, and repainted to comply. Also, all paint chips must be picked up from the ground and disposed of properly. With all the Cape Cod bungalow-style homes in the Chicago area, this is one of the problems I run into the most. 87% of homes built before 1940 contain lead-based paint.
2. Utilities must be on and operational at the time of inspection: The appraiser has to check all the utilities and mechanics to make sure they are on and operational. That includes those houses that are vacant and previously winterized. They must be des-winter to avoid a re-inspection and possible delay in closing. Utilities include heating / air conditioning systems, dishwasher, stove, lighting, and plumbing supplies like faucets and toilets.
3. Lack of a carbon monoxide detector: As of January 1, 2007, every Illinois home must have at least one working carbon monoxide alarm within 15 ‘of bedrooms. Even if you have bedrooms on both sides of the house, you need to install a detector in each area. The same rule applies to smoke detectors. See the IDPH website for more information on what carbon monoxide is and why it is dangerous.
4. Broken windows: Small cracks in the windows are not a big problem with the FHA. However, if the crack is more substantial or if the window is broken with exposed glass shards, it is a safety concern and the FHA requires that this be fixed.
5. Missing appliances: If appliances are missing where an appliance obviously belongs, it will need to be corrected. For example, if there is space for a dishwasher, but it is missing, that is a problem. If there is no obvious space where a dishwasher is supposed to be, then it is not a problem. Also, the appliances in there must be in good working order.
6. Exposed / frayed or bare wiring: This is due to the “security problem” that it would present. These cables can cause a great jolt and must be correct. If they are on the ceiling where a light fixture used to be, install a new fixture. Missing light switches and outlet covers should also be replaced.
7. Access to the attic and access space: The appraiser must complete a minimum “head and shoulders” inspection of the attic space. There must be an adequate right of entry to the attic and access space. That means if your hatch to the attic is located in a small closet that has clothes and boxes stacked on the roof, they need to be removed before the appraiser arrives for inspection.
Keep in mind that an FHA appraisal is not a guarantee that a property is free from all defects. The primary purpose of appraisals is to establish a home value for mortgage insurance purposes. I always recommend that the home buyer always hire a certified / licensed home inspector who is trained to “dig deeper” into the overall condition of the home.