Real Estate Gate Keeper – Appraisal Inspections

On November 6, 2011, in Uncategorized, by David Monsour

One of the most challenging aspects of any real estate transaction can be the appraisal. Not necessarily just because values have fallen a bit and comps can be hard to come by in some areas but because certain loans require a home to be in a certain condition to “pass” the appraisal. The most common issue is chipping paint. Homes built before 1978 are of the biggest concern because the paint could possibly contain lead which is considered a hazard. Homes build after 1978 with chipping paint may need to be repaired because it is protecting the wood that it’s covering. Other common issues are handrails, pressure relief valves, flooring, and so on.

These problems are most common on VA, FHA, and USDA loans. In the Gettysburg Hanover Real Estate Market many properties are sold using one of these loan products because they require little or no money down depending on the loan. Low down-payment conventional loans are available but also have strict standards. The house can have more “issues” but there are other conditions that may prevent a property from “going conventional” so we REALTORS like to say.

In my recent experiences the appraiser are always finding something. No matter how big or how small they are finding a reason to revisit the property to make sure the repair was done to their standard. My personal theory is that the appraisers out to make an extra $80-100. Each time they revisit the property they charge somewhere between 80-100. I don’t find this cost unreasonable but I do think that the re-inspections are often unnecessary. On the flip side I do believe that much like lenders the appraisers are facing tightened legislation which is causing this appraisal issues. Either way the appraisal process is slowing our average transaction timeline. We used to be able to close a deal in 30 days pretty easily. In today’s real estate market most deals are usually taking 45-60 days. Those 30 days settlements are still possible but not nearly as common as they used to be.

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