FHA Appraisals

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Real estate agents and other people who sold homes before the last couple of years and don’t have any recent experience with FHA loans will often run screaming when they see an offer come in contingent on FHA financing. However, as of the latter part of 2005 FHA appraisal reform:

• Eliminated minor cosmetic repairs, allows “as is” appraisals and no longer requires automatic inspections for termite, well or septic.
• Eliminated Valuation Conditions sheets & the Homebuyer Summary form, preventing delayed closings.

These items alone caused countless closings to be delayed for days in prior years while frantic homeowners caulked nail holes, filled in minor cracks in siding, dug dirt out from around the foundation and countless other barely noticeable minor repairs that they didn’t find out about until the last minute. Now there is rarely ever a delayed closing because of an appraisal issue - unless there is a real problem with the value because of declining prices in the area.

In addition, there is now the streamlined 203K program that allows for up to $35000 worth of repairs to be financed into the loan if the property is truly in need of repairs. This is very helpful for buyers of HUD foreclosures. More on this later.