Mortgage Appraisals and Appraised Value
The property appraisal is not intended to derail a home purchase. In fact, the mortgage appraisal can function as a consumer protection for a buyer, being an independent, third-party report documenting the market value of a home after careful consideration of comparative sales, the location, visual appearance and condition of the property.
This document highlights conditions in a property that the appraiser may note when completing the property appraisal.
Minor Conditions and Deferred Maintenance
The property appraisal can be completed in “as is” condition as long as minor conditions and any deferred maintenance do not affect the livability, soundness, or structural integrity of the property, and the appraiser’s opinion of value reflects the existence of these conditions.
- Worn floor finishes
- Holes in window screens
- Worn interior paint
- Cracked window glass
- Minor plumbing leaks
Conditions Requiring Additional Inspections and/or Repairs
Property conditions that would require inspections and/or repairs are items that could affect the livability, soundness, or structural integrity. Conditions that would require additional inspections – and possible repairs as a result of the inspections – are outside of the expertise of the appraiser to estimate costs or to determine the extent of the deficiency. Dependent upon the loan program and guidelines, these repairs may need to be made prior to closing. Please discuss any of these property conditions with your loan officer.
- Cracks or settlement in the foundation
- Water seepage
- Active roof leaks
- Evidence of mold contamination
- Curled or cupped roof shingles, missing shingles or tiles
- Inadequate electrical service of plumbing leaks
- Evidence of termite infestation
- Chipped or peeling exterior paint
Secondary investors hold the appraiser and lender’s underwriter responsible for determining if the property is adequate collateral for the loan after evaluating the property condition, location and market value.
The decision to accept or reject a property will depend on the type of loan, the availability of data and support provided by the appraiser included in the appraisal report.
More Information about owning a home and a home mortgage
Consumer Financial Protection Bureau
Owning a Home