Baton Rouge FHA Appraisers William D. Cobb

http://batonrougefhaappraisers.com/ - Baton Rouge FHA Certified Home Appraisers - 19 Most Common FHA Appraisal Report Errors

Source: Anthony Blackburn, FHA Appraisal Reviewer

From Bill Cobb: I found this to be a very good reminder / refresher article on FHA Appraising.   Enjoy!

After reviewing a batch of about 25 reverse mortgage appraisals made for HUD, post-funding, I found that not a single one complied with all of HUD’s requirements and guidelines, based on their Appendix D: Valuation Protocol. In order to help appraisers check their own work, and avoid these errors, I made the following a list, for publication by Real Estate Valuation Magazine.

The most common errors and omissions I found were as follows:

1) Failure to Include patios, porches, garages, breezeways and other offsets on the sketch.

2) Failure to state “covered” or “uncovered” to indicate a roof or no roof on a porch structure (such as over a patio).

3) Failure to include a street scene photo which shows a portion of the subject site.

4) Failure to enter a legal description of the property.

5) Failure to state that the use of the appraisal is to support FHA’s decision to provide mortgage insurance on the real property that is the subject of the appraisal.

6) Failure to include in “intended users” both the lender/client and FHA.

7) Failure to clearly define the boundaries - north, south, east and west - of the subject’s neighborhood. Providing a description of neighborhood boundaries by physical features such as streets, rail lines, other man-made barriers or well defined natural barriers (i.e. rivers, lakes, etc.) is required to detail the make up of the neighborhood and enhance understanding of its composition.

Failure to adequately and accurately describe current market conditions in the subject’s neighborhood.

9) Failure to list all the dimensions of the site, beginning with the frontage. If the shape of the site is irregular, all of the boundary dimensions must be reported. (e.g., 85′ X 150′ X 195′ X 250′).

10) Failure to describe the view from the property (”None” is not an acceptable response!).

11) Failure to include the correct zoning information, based on local zoning maps and statutes.

12) Failure to correctly report the number of comparable sales in the past 12 months and include active listings on page 2.

13) Failure to correctly calculate time adjustments from the contract date of the sale, and report both the contract and closing dates when time adjustments are made.

14) Failure to enter the name of the subdivision or PUD in the location field in the sales comparison approach.

15) Failure to describe the view from the site on the sales comparison approach (e.g., similar homes, commercial area, water view, scenic view, etc.). Such terms as “Average” or “Good” are only acceptable as modifiers: “Residential/Average”, “Water view/Good”.

16) Failure to enter the actual age of the subject in the “age” field of the sales comparison approach. The effective age may be considered and described in the Comments section (for example, if there has been substantial upgrading and renovation of an older structure) but not on this line, which is reserved for actual age only.

17) Failure to accurately report the subject’s condition as “Fair” when it is indeed “Fair”. Like a teacher’s reluctance to give a C grade to an average student, due to universal grade inflation, appraisers are falling into the broker puffing trap of overrating properties. Fair is a lower rating than Average, which in turn is below Good.

18) Failure to analyze and report the analysis of the subject’s prior sales. This is an essential aspect of appraising for FHA in the current market, and is required to help HUD and other agencies spot “flipping” of substandard properties which have been cosmetically enhanced without genuine structural repair.

19) Failure to research prior sales or transfers of comparable sales. (See #18 - same reason.)

If you are guilty of these errors yourself and want to clean up your act, it pays to re-read the HUD Valuation Protocol, a PDF download available from REV. Just click here: HUD Valuation Protocol 4150.2 Appendix D (Note: This is a big file; it may take several minutes to download.)

A real estate appraiser since 1986, Anthony Blackburn began his career as a staff appraiser with First National Mortgage of San Jose. He later worked for Diablo Appraisal in San Ramon and joined Apple Appraisal in Martinez, CA in 1991. In 1996, he became a partner in the firm. Mr. Blackburn founded Apple Appraisal’s review department and managed it directly for several years. Mr. Blackburn has taught appraisal review for the CA Association of Real Estate Appraisers, and served on numerous industry boards of directors. He was State Board President in 1998. Mr. Blackburn continues to be very involved in the local lending community and speaks regularly to affiliated industry groups. He writes for various media outlets. Mr. Blackburn is married, with two children. He enjoys making award winning wine, playing competitive league soccer, and riding his motorcycle. He may be reached at Apple Appraisal Inc., ph: (925) 313-5900 • http://www.appleappraisalinc.com/ • email: ablackburn@goapple.com