Safe, sound and secure
FHA's property standards come down to three ideas: the home must be safe to live in, structurally sound, and secure. The appraiser isn't a home inspector, but they will note issues that affect health, safety or the home's ability to last.
What commonly gets flagged
Roofs that are leaking, failing or near the end of their life.** Peeling paint** on homes built before 1978, because of lead paint concerns.** Missing or broken utilities,** since water, power and heat or cooling should be working.** Electrical hazards,** like exposed wiring.** Water damage or active leaks.** Broken windows or doors and missing handrails where they're a safety issue.** Well and septic** problems, or wells too close to septic systems.** Termite damage** when the appraiser sees evidence.
Florida specific issues
Older roofs are the big one. Even if the appraiser is satisfied, Florida insurers may require a four point inspection and may decline older roofs or certain electrical panels and plumbing. Get insurance quotes during your inspection period. The same issues that affect VA loans apply here, so see Florida homes that cause appraisal problems for detail on roofs, panels, plumbing, flood zones and permits.
The appraisal follows the property
FHA appraisals are tied to the property for a period of time, not just to you. If you switch FHA lenders, the appraisal usually comes with the case. And if a home had an FHA appraisal recently for another buyer, a new FHA buyer may be held to that same appraisal, including any required repairs and the value. Ask the listing agent whether there was a recent FHA appraisal.
Repairs: who pays and when
Required repairs are usually completed before closing, then confirmed by the appraiser. Who pays is negotiable. Sellers often handle them, especially small items. For some repairs, like exterior work delayed by weather, an escrow holdback may allow the work to be completed after closing. For bigger projects, consider an FHA 203k loan, which finances the repairs.
Low appraisals
If the home appraises below the price, you can renegotiate, cover the difference in cash, or walk away. FHA contracts include an amendatory clause that lets you cancel without losing your earnest money if the value comes in low.
Peeling paint on a 1960s home
Rachel's FHA appraisal on a 1960s ranch in Orlando flagged peeling exterior paint, which mattered because of the home's age.
The seller had the affected areas scraped and repainted, the appraiser confirmed the repair, and she closed a week later than planned with no other issues.
Frequently asked questions
Is an FHA appraisal stricter than conventional?
It includes a check of minimum property standards, so it can flag safety and condition issues a conventional appraisal might not require fixing.
Does an FHA appraisal transfer to a new buyer?
FHA appraisals are tied to the property for a period of time, so a later FHA buyer may be held to a recent appraisal.
Who pays for FHA appraisal repairs?
It's negotiable. Sellers often pay, and some repairs can be handled with an escrow holdback.
What if the FHA appraisal comes in low?
The amendatory clause lets you renegotiate or cancel without losing your earnest money.