Does an FHA appraisal look at detached outbuildings?

Asked by Mystique, Alameda, CA Fri Jan 4, 2013

Does an FHA appraisal look at detached outbuildings? I want to use an FHA loan, but a VERY detached garage on the property is a teardown. Would that be a section I seller repair item? They do not want to pay for any repairs. I don't care about the garage and could rebuild it down the road....

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Claudia Muller’s answer
Claudia Mull…, Mortgage Broker Or Lender, Fremont, CA
Sun Jan 6, 2013
Steve is correct about health and safety
The appraiser will make comments and most likely not give it any value.
I just had an FHA appraisal where an out building had been a garage and need roof repairs. Appraiser mentioned and stated it was given no value due to disrepair.
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Steven Ornel…, Agent, Fremont, CA
Sat Jan 5, 2013
Hi Mystique,

If the Seller is not going to make the repairs to, or rebuild, the garage you had best move along to looking for the next property.

As a standard FHA Buyer your Appraisal/Loan are dependent on what the FHA Appraiser’s "health and safety" appraisal calls out to be corrected. Essentially, the Appraiser is the lender's eyes and ears, so he/she is obligated to provide both an estimate of value and an evaluation of those “health and safety” conditions which could affect that value. The Appraiser makes a value determination “subject to” any identified corrections.

Now, you may be thinking: “How do I know what classifies as a health and safety issue?"

Well, aside from the recommendation you work with a Realtor® that has some experience in building/remodeling there are some clues provided in various areas of the FHA Appraiser's Handbook with clear direction to have the Appraiser note safety/hazards for repair. For example:

"Required repairs are limited to those repairs necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants."

"The property must be free of all known hazards and adverse conditions that: may affect the health and safety of the occupants.."

"The appraiser must note and make a repair requirement for any health or safety deficiencies as they relate to the subject property,.."

What actually constitutes a "health & safety" issue was revisited in a 2005 Mortgagee Letter (this is how FHA changes/clarifications are announced). There are many examples of items that DO and DO NOT fall under the category of a "health & safety" issue.…

Best of luck with your search!

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