An FHA appraisal is used by a lender to not only provide a market value opinion for the property, but also to determine if the property meets the minimum requirements and eligibility standards for a FHA mortgage.
In the performance of the FHA appraisal, the appraiser will denote applicable deficiencies as well as the repairs necessary to make the property comply with FHA's Minimum Property Requirements and/or Standards, as well as provide an estimate of cost to cure (repair) those deficiencies.
Cosmetic repairs are not required. Beautification of the property is not required for the preservation of the property. However, the condition of the property is considered in the appraiser's overall rating and valuation of the property.
The physical condition of the existing building improvements is examined at the time of the appraisal to determine whether repairs, alterations or professional inspections are necessary to eliminate any conditions threatening the continued physical security of the property.
Required repairs are limited to the three S's-Safety, Soundness and Security.
Safety could include possible infestation, and/or missing handrails. Anything that could compromise the safety of the occupants.
Soundness would be anything affecting the structural integrity of the property, such as leaking or worn-out roofs, structural failure, and/or cracked masonry or foundation damage.
Security would include properly working, and not blocked doors and windows.
Based on the inspection of the property the appraiser will mark one of the following conditions:
As Is-No repairs, alterations, or inspections are necessary.
Subject to Completion per Plans and Specifications-New properties in which construction has not been started, or is less than 90% complete.
Subject to the following Repairs or Alterations-Repairs or any alterations noted by the appraiser, or new properties that are more than 90% complete.
Subject to the following Required Inspections-Required professional inspections as noted by the appraiser.
Be advised that the above is not exhaustive of FHA minimum Property Requirements/Standards, and other unrelated conditions may effect the eligibility of the property.