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
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 below.
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Thanks for reading,
Gary F. Kristensen, SRA, IFA, AGA