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         FHA Appraisal           

Seller Concessions

FHA requires mortgagees to provide appraisers with all financing data and sales concessions for properties to be security for an FHA-insured loan.  Appraisers are required to identify and report sales concessions and properly address and/or adjust the comparable sale transactions to account for sales concessions in the appraisal of all properties to be security for an FHA-insured loan.  Sales concessions influence the price paid for real estate.  Sales concessions may be in the form of loan discount points, loan origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance, monetary gifts or personal property given by the seller or any other party involved in the transaction.

Personal Property

Items such as ranges, refrigerators, dishwashers, washers/dryers and microwaves may be considered as part of the real estate and included as part of the sale. No other appliances or chattel should be considered part of the real estate.

A dollar for dollar reduction to the mortgage amount for items not considered part of the real estate is required unless the item has no monetary value and left to the buyer's discretion to dispose of the property.

Roofs and Attics:

The roof must prevent moisture from entering the home and provide reasonable future utility, durability and economy of maintenance. The roof should have a remaining physical life of two years. If the roof has less than two years remaining life, the appraiser must call for re-roofing or repair.

FHA will accept a maximum of three layers of existing roofing. If more than two layers exist and repair is necessary, all of the old roofing must be removed as part of the re-roofing.

Roofing on slopes of 2.5/12 pitch or less must be installed by a licensed roofer using built-up roofing that meets the Uniform Building Code.

Flat roofs require a roof inspection.

 If the subject property is part of a large multifamily building (i.e. condo), no roof inspection is needed. If the building is a small 4 unit building or townhouse type unit covered by a condo association with the subject property having its own roof, then a roof inspection is required.

The FHA appraisers are required to inspect the attic area unless the property is a mobile home or dwelling with little or no attic (due to the interior roof slope).

The appraiser will note any evidence of holes in the roof/ceiling, the condition of the support structure, any significant water damage that is visible from within the interior and evidence of ventilation by vent, fan or window.

Basements and Crawl Spaces:

Basements must be examined by the FHA appraiser for dampness or wetness, any obvious structural problems and the condition of the furnace, hot water heater, and/or other components located there.

Sump pumps are acceptable to HUD/FHA guidelines provided that they are properly functioning at the time of appraisal. The sump pump may be hard wired by an acceptable wiring method or may have a factory electrical cord that is connected to a receptacle suitable for such use. Use of an extension cord for the sump pump is not acceptable. Though the sump pump is not a cure-all for water problems, the appraiser may still elect to reject the property if there is significant incurable ponding of water in the basement.

Property owners must insure that there adequate access to the property's crawl space, clear of debris, and is properly vented. The appraiser must enter the crawl space with a minimum entry of his/her head and shoulders (unless access is not possible, could damage the property, or an adverse situation is suspected). HUD guidelines recommend a minimum height of 18 inches from the bottom of the joists in order to provide adequate space for maintenance and repair. Furthermore, the crawl space must not be excessively damp and not have any water ponding.

Electrical and Heating:

The FHA appraiser should examine the electrical box to ensure that there are no frayed or exposed wires. Electrical boxes may be either circuit breakers or fuses. Existing 60-amp service is acceptable if it appears that this is adequate amperage for the appliances present in the property, or those considered "standard" if the present appliances appear to be less than found in the "standard" home. Knob and tube wiring is acceptable if found to be in good condition and a minimum of 60-amps. For all electric homes and those with electric heat, 200-amps is recommended

In general, all habitable rooms must have a heat source. This does not mean that each room must contain a heating device but that each room must receive sufficient heat. In some situations where it is not feasible to extend the capacity of the main system, an electric and thermostatically controlled baseboard unit is acceptable provided it is permanently installed with concealed wiring.

Heating must be adequate for healthful and comfortable living conditions. This is defined as providing and maintaining a temperature of at least 50 degrees Fahrenheit in all living areas and areas containing plumbing systems. Further more, all permanent primary heating systems must be thermostatically controlled and properties with electric heat sources must have an acceptable electric service that meets the general requirements of the local municipal standards.

Wood stoves and solar systems: Homes with wood burning stoves or solar systems as the primary heat source must have permanently installed conventional heating systems that can maintain at least 50 degrees Fahrenheit in all living areas and those containing plumbing systems. These systems must be installed in accordance with the manufacturer's recommendations.

Wall heaters: Wall heaters are acceptable as long as they are installed to code and designed to heat the size and layout of the entire house.

Floor heaters: Due to the inherit dangers of a floor heater, it is highly recommended that floor heaters in need of repair be replaced with another permanent heat source. They are acceptable as long as they are properly functioning and meet current code.

Non-conventional heating systems: All non-conventional heating systems, such as space heaters and others, must comply with local jurisdictional guidelines. Often these are not acceptable as the primary source of heat.

Finally, propane tanks must be a safe distance from the property. Leased tanks are acceptable when not offered for sale. Propane fired furnaces located in a crawl space area is not acceptable.

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