as is Appraisal versus FHA 203k Aprasial

Asked by Kenneth, Chicago, IL Tue Dec 29, 2009

Is it proper to share your appraisal with your Realtor. Also how does an FHA203k appraisal compare to an as is appraisal that involves a purchase only and not a rehab?

Help the community by answering this question:

+ web reference
Web reference:


Carriedia, Home Buyer, San Francisco, CA
Wed May 6, 2015
FHA 203k Appraisal Guidelines:

An appraisal conducted by a licensed and approved FHA appraiser is needed for underwriting a 203k loan. All residential home loan programs including VA, FHA and conventional (Fannie Mae, Freddie Mac) require the performance of comprehensive appraisal report.

The type of appraisal required for the financing of rehab property is specified under the 203(K) appraisal requirements and guidelines.

The primary objective of an appraisal report is to establish the value of a subject property based on its existing condition and local market conditions. A lender evaluates other factors only after the suitable property value has been determined.

The loan amount allowed by the 203(K) rehab loan program is determined based on the market value established by the FHA approved appraiser.
Reference Link:
0 votes
Actually the appraiser will appraise the property "as improved" to establish the loan amount and it will be subject to the required repairs.
Flag Sun Oct 4, 2015
Wayne Beals, Agent, Chicago, IL
Wed Mar 10, 2010
Just wanted to get back to this thread.

I and a lender who specialize in 203K loans will be hosting a free workshop on Saturday, March 13th, from 9AM to 1PM at our facility in Bronzeville, 716 East 47th Street. We do have limited space, so if you'd like to attend, please RSVP with me at 312-772-3257.

The lender will present a couple case studies, and cover the 203K loan guidelines, fees, time lines, appraisal process, etc and will be available to answer questions. It's a great opportunity to become very familiar with the 203K process.

Wayne Beals
Keller Williams Chicago Consulting Group
0 votes
Wayne Beals, Agent, Chicago, IL
Tue Dec 29, 2009

Phil hit the nail on the head.

You need to make sure your Realtor is up to speed with all facets of your transaction. Everyone who is on your side of the fence should be working together to get you the best deal and close it smoothly. If you can't trust someone helping you, you need to evaluate why and make necessary changes.

203K loans have an after improved value appraisal that is conducted as part of the underwriting process. This appraisal takes into account repairs and improvements you will be doing as part of the 203K loan package, and is in place to help prevent you (and your lender) from being underwater after work is completed. If 203K is an option you are considering, you should be working with an experienced 203K lender to help you understand the process. Your Realtor should also be familiar with 203K so they can help you get into a "viable" contract. It makes no sense to place a contract on a property only to find out that the amount of repairs needed exceed the after improved value. You deal will not close, as Phil mentioned.

Not every property will work for a 203k. For example, a property may be habitable or near habitable, and a buyer (because of location, or some other unique factor) may be willing to pay for the utility of some of the properties marginal attributes (such as out-dated but functional HVAC, Electric or Plumbing). In this case, to get the property under contract, you may have to raise your offer to a point that may not work for the after improved value if you are going to replace these outdated systems.

Your agent is the first one to go to a property with you, and should be familiar with local construction codes, methods, and cost to help you begin to understand what it will take to renovate a particular property. By no means am I advocating that you should you rely on your agent for an estimate, even if they are a contractor. You should always get written estimates from licensed, insured contractors with excellent references and a good track record. The lender will also enlist a specification writer who help you (and them) determine the actual cost of renovations. I am suggesting, however, that a good agent will help find the right candidate property for a 203K at the right price, before too much time, effort, heartache and money is expended.

Best of luck.

Wayne Beals
Keller Williams Chicago Consulting Group
0 votes
Kurt Clements, Agent, Schaumburg, IL
Tue Dec 29, 2009

Do you have a lender? I ask because over the last few weeks you have had a ton of questions on the 203k program and he or she should have reviewed all ot these situations with you before you even started looking for homes. If you do have a lender, it appears you are very uncomfortable with them and recommend you find someone else.

The 203k appraisal is actually 2 appraisals - an appraisal as the property is now, and an appraisal on the property after the work is done. It should be about $600 if it is a single family residence. Usually the client does not share the appraisal with their realtor, but I don't think it matters either way.

Kurt Clements
Senior Vice President
GSF Mortgage
3933 75th Street
Aurora, IL 60504

Office: 630.806.7016
Cell: 630.430.1091

http://www.gsfgovernmentloans. com
0 votes
, ,
Tue Dec 29, 2009
Kenneth that is a great question! To answer your first question, there is not harm in sharing your appraisal with your Realtor, they are there to support you and to ensure that you understand each step along the way in the buying process.

In regards to a standard appraisal versus a 203K appraisal the major difference is that a standard appraisal gives you the value of a home based on other properties that have sold in the area that most similarly reflect the home you are looking to purchase. A 203K appraisal will give you the AS-IS value which is the same value you would get on the standard appraisal, as well as, the anticipated value of the property, once the projected repairs have been completed, known as the Subject to Value. The ARV (After Repair Value) is based on the dollar amount of repairs that you will complete. Adjustments are made based on homes that have sold in the area that are similar to the property you are purchasing with this consideration in mind. Hope that helps. Please feel free to give me a call if you have any other questions!

Cecelia Marlow
PanAmerican Mortgage, LLC
773-782-6000 direct
0 votes
Philip Sencer, Agent, Chicago, IL
Tue Dec 29, 2009
In a 203K, the appraiser needs to confirm that the cost of the work needed to make the repairs is 'reasonable' to actually make the property habitable. If that number has been under estimated, then the deal is likely to fail. A regular appraisal does not need to deal with that issue.
If the appraisal does not come in on target the agent will find out when the deal dies. I do not see any reason to keep it a secret.

0 votes
Richard Leci…, , Tucson, AZ
Tue Dec 29, 2009
You should let your realtor know how the home has apprasied. If you are not doing any repairs then you would only get a standard FHA loan.
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more