I just received my appraisal report on the house I'm *trying* to buy. The owner is mostly moved out and took the stove (part of the sales agreement). FHA has appraised the house lower than what we had planned on paying for it *and* it is requiring a stove be installed. So yes, FHA requires a working stove be included in part of the closing on the house. We have a stove, refrigerator, washer, and dryer on "hold" with homedepot. We aren't sure exactly how this will play into the bank (short sale) requirement to install a stove. We are hoping that they may be able to do some kind of repair escrow a far as the stove goes.... more
I take it your question has to do with the development of an appraisal.
By not adjusting for sales concessions you are/may be providing a misleading report and violating USPAP regulations, Standards Rule 1-2(c), which states: In developing a real property appraisal, an appraiser must:
(c) identify the type and definition of value and, if the value opinion to be developed is market value, ascertain whether the value is to be the most probable price:
(i) in terms of cash; or
(ii) in terms of financial arrangements equivalent to cash; or
(iii) in other precisely defined terms; and
(iv) if the opinion of value is to be based on non-market financing or financing with unusual conditions or incentives, the terms of such financing must be clearly identified and the appraiser's opinion of their contributions to or negative influence on value must be developed by analysis of relevant market data.
An appraiser must consider any and all sales concessions and adjust as necessary. If an adjustment is not warranted, the appraiser must address the reasoning behind the lack of adjustment and provide available support for the reasoning.
FHA Mortgagee-Letter 2005-02 states: Appraisers are required to identify and report sales concessions and properly address and/or adjust the comparable sales transactions to account for sales concessions in the appraisal of all properties to be securities for an FHA-insured loan. Sales concessions influence the price paid for real estate. Sales concessions may be in the form of loan discount points, loan origination fees, interest rate buy downs, closing cost assistance, payment of condominium fees, builder incentives, down payment assistance, monetary gifts or personal property given by the seller or any other party involved in the transaction.
Inducements paid by the sellers or builders cause an additional cost of sale, which is usually compensated for by raising the negotiated sale price. However, the higher price of a sale causes the indicated value of the subject property to be artificially higher unless an adjustment is made.... more