Real estate appraisers who are following lender guidelines
often make home appraisal reports “subject to” or “call out” repairs of certain
issues. I recently wrote about how there
are often gray
areas when appraisers call out these repairs. For this article, I will focus on what
happens when an appraiser calls for the repair and later must sign off that it
has been completed.
An appraisal that is made subject to inspection by another professional
is different than calling for a repair. After
a subject to inspection, the appraiser is usually finished with the process. An example is that the appraiser is unsure if
the roof has sufficient life left and chooses to complete the appraisal subject
to inspection, assuming that the roof is satisfactory. The lender will then hire a roofer or the
appropriate professional to provide an opinion on the roof’s adequacy before
proceeding with the loan.
When an appraisal is made subject to repair, the appraiser
will normally need to return and verify that the remedy has been completed
before the bank will proceed with the loan.
In this case, and for most types of loans, the appraiser uses the Fannie
Mae Form 1004D Certification of Completion. With this form, an appraiser returns to the
property and verifies that the conditions in the appraisal have been met.
Often, lender clients or real estate agents will call
appraisers and ask, “Can I send you a picture of the repair and have you sign a
1004D that it has been completed?”
Lenders make this request to save time and money. The problem is that when an appraiser signs
the Form 1004D, they are signing that they “…performed a visual inspection of
the subject property to determine if the conditions or requirements stated in
the original appraisal have been satisfied.”
In my opinion, this leaves us with bit of a professional
conundrum. Given that appraisers cannot
edit preprinted forms, I believe that by signing the 1004D, an appraiser
certifies that he or she has personally viewed the repair. While it can be argued that seeing a photo or
video could also be considered as “viewing,” I am not willing to risk my
professional standing by being perceived as misleading (at best) or in
violation of licensing requirements (at worst).
What do you think? Does anyone
know of a definitive ruling on this issue by Fannie Mae? Please share your views in the comments
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Thanks for reading,
Gary F. Kristensen, SRA, IFA, AGA