To elaborate a little more to what they stated - An FHA appraisal and conventional appraisal are done basically the same. Comparables (sold and active) are chosen by research based on similarities, location, and time frame. Time frame consists of the most recent sales, location consists of the closest to the subject property, and similarities consists of (exact - closest to - similar) square footage, age, construction, room count, bedroom count, bath count, amenities, condition, lot size and usage, location.
An FHA appraisal requires more visual inspection of the property to meet FHA guidelines and requirements for Safety - Security - and Soundness. Here is a link that details an FHA inspection - APPENDIX D: VALUATION PROTOCOL http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4150. - it's 139 pages in PDF format. It is also part of the FHA Handbook 4150.2 for appraisers - link to sections of handbook - http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4150. .
Here is another link that has Mortgagee Letters with information that may be of interest - such as Max Mortgage Limits, Second Appraisals, Lender Accountability, Repair and Inspections - http://www.hud.gov/groups/appraisers.cfm
An FHA appraisal will generally cost more than a conventional due to the additional work and time involved and it is best if you pay the appraiser directly (at time of inspection) due to the fact that many lenders lately have been inflating appraisal costs on closing docs for more than what was actually paid. You are also entitled to a copy of the appraisal but you have to request it in writing from your lender since USPAP regulations prohibit appraisers from providing a copy (or discussing) to anyone except the client who ordered the appraisal regardless of who paid for it.
The only things that are different when it comes to an FHA vs a Conventional Appraisal is that the Appraiser will be looking the safety hazards such as Missing Handrails, major defects, chipping paint, etc. The FHA appraisal guidelines are no way as strict as they were in years past. I always say "It is not your daddys mortgage any more!!!!! I am sure you will be just fine - Just double check the Good Faith Estimate to make sure you are getting a good value on the closing costs.
If you have any more questions, I would be happy to help - just shoot me an email at firstname.lastname@example.org - Make it great night.
All appraisers work the same way whether for an FHA, VA or Conventional loan. What is different are the restrictions placed by the program and/or underwriters at the bank.
Appraisers do chose the homes and try to find comparable homes sold within the last 3-6 months and within a 1/2 to mile radius of your home. They try to stay within the same community so taxes, school district and other ammenities are similar. They will look for homes similar in style and age to use as comparables.
Remember they are working for the bank and the loan underwriter will often ask an appraiser why they chose didn't choose to use a property that looks comparable so they cannot just skip over a home that has been foreclosed on or sold as a distressed property without justification. If they do use a distressed property as a comparable they can note the condition and circumstances. Appraisers find out details about the condition by calling the listing real estate agents that sold the properties. All of their findings are noted and considered.
Hope this information is helpful!