We continue to see appraisal problems with HUD Handbooks and effective age. Water and Power must be on in order for the subject house to be properly inspected to determine if it meets the HUD Handbooks. We continuously see appraisals stating the HUD Handbooks are met, but the appraiser states power and/or water was not on (this is a contradictive statement). Please make sure the property meets HUD Handbooks with power and water on unless there is a repair required by the appraiser in order to meet the HUD Handbooks for the power or water to remain off until the repair is complete. Effective age must be supported with a detailed explanation within the appraisal.
Below is a list of questions that will assist you in your review before submitting your appraisal for review to RD. This will help speed up the USDA review and resolve some of the appraisal issues we are currently seeing.
1. ___Is the appraisal report signed and dated? (No supervisory signatures allowed per HUD 4150.2)
2. ___If the actual age is substantially different from the effective age, has the appraiser supported the effective age with supporting documentation of all recent renovations?
3. ___ Are comparables similar to the subject in size, age, design, quality, and amenities? Are all comparables sold within last 12 months and from similar neighborhoods?
4. ___ Are all the adjustments on the URAR grid considered reasonable and consistent? (Lenders may be asked to provide supporting documentation on large line item adjustments)
5. ___Are net adjustments exceeding 15%, gross adjustments exceeding 25%, and individual line adjustments exceeding 10% adequately documented in the report?
6. ___If the subject is new construction; did the appraiser use new construction comparables? Â Or if subject is existing, were comparables of existing homes used? (If not, a thorough explanation is needed why the same type comparables were not used)
7. ___ Did the appraiser place an emphasis on â€œlistingsâ€ or â€œa dwelling under contractâ€ to help support the Market Value? (Note: RD does not allow use of unclosed comparables)
8. ___Does the land and/or lot value exceed 30% of the appraised value? Is so, additional supporting documentation should be documented (Is it typical for the area and can the property be subdivided)
9. ___Is the appraiserâ€™s opinion of the land and/or lot value appropriate and supported?
10. ___ Has the Cost Approach on Page 3 of the URAR been completed as required for new or existing dwellings less than 1 year old?
11. ___Does the appraisal report contain the statement that the dwelling meets the HUD Handbooks? (Note: All utilities must be on at the time of inspection
12. ___Does the Market Value appear reasonable and supportable given the current market trends and conditions? Has the appraiser avoided the appearance of backing into the estimate of Market Value?
13. ___If the dwelling needs repairs and/or modernization, has the appraiser noted the items in the report and made the report â€œsubject toâ€ repairs being completed?