If you’re getting ready to sell your home, and anticipate that some of your potential buyers may use FHA financing, it is important to make sure that your home does not have any FHA violations. It just makes the whole processes much easier when your home is violation free. It will save you time and money in the long run.
I’ve been performing FHA appraisals since 2000. Believe it or not, on a regular basis, I have home owners and real estate agents who tell me that some of the things I point out as FHA violations, were never mentioned in other FHA appraisal inspections. So, I thought I would mention some relatively common FHA violations I see when making my FHA inspections.
This is not reflective of every potential FHA violation. However, these are the ones I see on a regular basis. I hope you find this information useful.
Any exposed wiring needs to have the wires capped so that no metal is exposed.
Electrical outlets and light switches need to have covers on them. The outlet in the picture below is unacceptable.
If an electrical outlets and/or light switches need covers, how much more so an electrical panel?
All exterior outlets need to be GFCI outlets (ground fault circuit interrupter). Just having a weather proof cover is not enough.
PEELING AND CHIPPING PAINT
Homes built on or before 1978 may have lead paint in them. So FHA requires that any chipping, peeling and loose paint be scraped off and discarded of properly. Once scraped off, the bare wood will need to be repainted.
This includes both the interior and exterior of the main dwelling as well as any accessory buildings like garages and sheds. This would also include other things like decks and fences. A common area in which I see defective paint is on exterior door trim and thresholds.
On older homes, I often see defective paint on foundations that have been painted, like in the picture below (left). I also often see defective paint on window trim, like the other picture below (right). Sometimes a home owner might not realize that there is defective paint on window trim due to curtains covering these areas. It’s good to check these areas before the FHA inspection is made.
Trip hazards can be anything from concrete that has sunk to damaged flooring on the interior that could cause someone to trip and fall. Any situation that could be considered a trip hazard should be corrected. Full disclosure, pets are not considered to be trip hazards for FHA. 🙂
UNSECURE DOORS & BALCONIES
This sliding glass door in the picture below (right) needs to be secured in such a way that it cannot be opened by a child (or anyone else for that matter). Some kind of lock, railing or steps need to be added so that someone does not accidentally fall. Balconies need to have railing around them also as seen in the pictures below (left).
WATER HEATERS & PLUMBING
Water heaters need to have the pipe that extends from the pressure relief valve down to the bottom of the water heater. In the picture below, the pipe is missing. According to the FHA Handbook 4000.1, “the Appraiser must examine the water heater to ensure that it has a temperature and pressure-relief value with piping to safely divert escaping steam or hot water.” The water heater also needs to be operational. The appraiser will turn on faucets to make sure that the water heater is actually heating the water.
With regards to the plumbing systems, the appraiser must flush the toilets and operate a sample of faucets to check for water pressure and flow. The appraiser will also observe whether or not the water emits a foul odor. I know, foul odors and bathrooms go hand in hand. But, there should not be a foul odor when simply turning on the water.
WELL & SEPTIC SYSTEMS
When it comes to well & septic systems, I really don’t see many FHA violations. If the property utilizes well water and a septic system, there are a few things that the appraiser will check. Wells need to be 10 feet from any property line and 50 feet from a septic system and 100 feet from a septic system’s drain field.
It should be noted that according to the FHA Handbook 4000.1, “If the subject Property line is adjacent to residential Property then local well distance requirements prevail. If the subject property is adjacent to non-residential Property or roadway, there needs to be a separation distance of at least 10 fee from the property line.” (Distance requirements of local authority prevail if greater than stated above.)
Wells must deliver a flow rate of five gallons per minute and have no exposure to environmental contamination. Generally, this is determined by qualified professional other than an appraiser. However, if the appraiser is made aware of a problem with the flow rate or exposure to environmental contamination, this will be noted in the report.
The well must offer a continuing supply of safe potable (drinkable) water. The well water must also meet EPA and local standards. Please refer to the FHA HUD Handbook 4000.1 for more guidelines on wells, including shared wells.
For septic systems, they must be operational and in compliance with local code. If it is feasible to connect to public sewers, and the cost is reasonable, the property will need to be connected to public sewers.
The Appraiser must report when a property has security bars on bedroom windows or doors. It’s acceptable to have security bars on doors and windows. However, they need to be able to be opened in the event of an emergency. Here is a picture of bars that do not have a way of being opened during an emergency. These bars, on a bedroom window, are not acceptable.
Speaking of windows, there must be direct egress from the bedroom to the outside of the structure which would allow a person to escape the room in the event of a fire or other emergency. Therefore, bedrooms must not only have at least one window and/or exterior door, but the window and/or exterior door needs to be operable so that it can open to the exterior. Appraiser’s will make sure that at least one bedroom window and/or door is able to be opened.
ATTICS & CRAWL SPACES
The appraiser must make a ‘head and shoulders’ view of both the attic and crawl space. It should be noted that the appraiser is not required to disturb insulation, move personal items, furniture, equipment or debris that may be obstructing the access or visibility. However, in this situation, the appraiser will contact the bank and reschedule a time when the inspection of the attic can be made, or the appraiser can complete the appraisal ‘subject to’ the attic being inspected by a qualified third-party. (That will cost more time and money)
In the attic, the appraiser is looking for water-staining, insufficient ventilation evidence of infestation or the smell of mold. The appraiser will also be looking for any safety hazards like exposed wiring.
If no access can be gained to an attic due to their being no scuttle, the appraiser will report the lack of accessibility to the attic. There is no FHA requirement to cut open walls, ceilings or floors to make the attic accessible.
Crawl spaces need to be free of debris like the one in the picture here. When observing the crawl space, the appraiser will make sure that the floor joists are sufficiently above the ground level to provide access for maintaining ductwork and plumbing. The minimum required vertical clearance is 18 inches from the grade to the bottom of the floor joist.
The crawl space must be properly vented unless it is vented by forced air. The crawl space should not have excessive dampness and must not having any water pooling. A vapor barrier like the one in the picture can be used to prevent water intrusion. As is the case with attics, if there is no access, the appraiser will report this. However, there is no requirement to cut open walls, ceilings or floors.
It should also be noted that there are some homes, like some historic houses, in which there is a vacant area beneath the flooring. This would not necessarily be considered to be a crawl space. That would be considered an “intentional void, with no mechanical systems and no intention or reason for access” according to the FHA Handbook 4000.1.
ROOFS, GUTTERS, DOWNSPOUTS & GRADING
Roofs that already have two layers of shingles should not be roofed again. Obviously, leaking or worn-out roofs will need to be replaced. Roofs with less than two years of remaining life (based upon the appraiser’s judgement), will require that the roof be inspected by a professional roofer.
Gutters and downspouts need to divert water away from the foundation. In the photo below, there is a downspout. However, it is not connected to the drainage system. This would is not acceptable. It either needs to be re-connected to the drainage system or have an extension added to it so that it diverts water away from the foundation.Clogged gutters and downspouts need to be cleaned and opened back up.
Appraisers will also look at the grading of the home at the foundation. If there is a negative grade, that is, the ground is sloping towards the foundation and not away from it, this situation will need to be corrected to ensure that water flows away from the foundation. A lot of water runs off of a roof when it rains. If not directed properly, all of that water can go right into the basement.
WHAT TO EXPECT DURING AN FHA APPRAISAL INSPECTION
What can you expect an appraiser to do during an FHA inspection of your home?
Here are a few things:
1. The appraiser will turn on the sinks and tub faucets in the bathrooms and in the kitchen, to make sure they are operable. The appraiser will also make sure that the water heater is heating the water. The appraiser will also look under the sinks to make sure they are not leaking.
2. The appraiser will flush the toilets to make sure they are operable. Generally the appraiser will flush the toilet while the water in the sink is running to see if there is any evidence of a water pressure issues.
3. The appraiser will note any appliances and note whether they are personal or real (attached) property. According to the FHA Handbook 4000.1, “The Appraiser must operate all conveyed appliances and observe their performance.” So, the appliances will need to be turned on and observed.
4. The appraiser will turn on the furnace to make sure that it is operational and that it also shuts off properly. The appraiser will also turn on the central a/c if the exterior temperature is appropriate to do so.
5. The appraiser will turn on lights in every room and check a representative number of electrical outlets in each room to make sure that they are operational and safe.
5. The appraiser will make a ‘head and shoulders’ view of the attic and crawl space, if they exist. The appraiser will need to make sure they can see all areas of the attic and crawl space, if possible.
6. The appraiser will open at least one window and/or exterior door in each of the bedrooms to make sure at least one window and/or exterior door is operable in each bedroom. Additionally, if there are bars on the bedroom windows, they must be tested to ensure that they can open.
7. The appraiser will also need access to the interior of garages, out-buildings and sheds to inspect them for safety issues.
It should be noted that, according to the FHA Handbook 4000.1 “An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.
While this is not an exhaustive list of FHA repair items, hopefully the repairs I touched on will prove to be helpful to you. And hopefully you’re not exhausted by them! If you would like to learn more about what is required in order for your home to be FHA compliant, call me or another appraiser in your area. I perform FHA compliance inspections for real estate agents, investors and home owners to point out any FHA violations that their home may have, before the home is listed. You don’t have to order an appraisal for this service.
Or, if you would like to go it alone, you can visit HUD’s website at HUD.gov and download the FHA Handbook 4000.1 and read through it.
Here are some other articles and videos I enjoyed recently! I hope you will also…
Waffling On The Housing Market – Housing Notes by Jonathan Miller
My blog is 10 years old today – Sacramento Appraisal Blog
6 Steps Agents Can Take When There Are No Comps To Price A Listing – Birmingham Appraisal Blog
February Newsletter – DW Slater Appraisal Blog
Change Your Frame, Change Your Life! – The Real Value Podcast!
411 Blockchain Technology Even An Appraiser Can Understand – The Appraiser Coach
Cheryl Kunzler, SRA, AI-RRS One of the Thought Leaders in Residential Valuation – Valuation Nation
Pat Turner, the Man with a Plan Valuer’s Dozen – Valuation Nation
Zestimate Obsession… – APPRAISAL TODAY
What Happens if My Appraisal Comes Back Under Contract Price? – Riverfront Appraisals
8 thoughts on “Common FHA Violations”
This is quite the extensive post Jamie. This definitely took hours to write. I’m impressed. I concur also. These are common things I’ve seen through the years also.
Thanks Ryan! It did take some time. I have been slowly chipping away at this one for a while. Have a great day!
I discovered my house has structural problems as well as exposed wires and it passed the FHA appraisal. Now I want to sell it. Can I get that appraisor for not doing her job? This house should not have sold with all the problems we have found since we took possession. That FHA appraiser said it didn’t even have a basement on her reorg. Isn’t that fraud?
Nancy, I am so sorry to hear this. There are a lot of questions that would have to be answered to determine whether the appraiser was negligent or fraudulent. Truthfully, sometimes we miss things. That may not rise to the level of fraud. I’m not making excuses. Since the lender was likely the appraiser’s client and intended user of the appraisal, I would reach out to them to point these things out. With structural issues, unless issues are easily observable, an appraiser may notice some things. The scope of an appraiser’s inspection is not to the same degree as a home inspector. That being said, it is strange that they may have missed that there is a basement. I would recommend letting the lender know and going from there.
Jamie, well done. With your permission I may post this link on my facebook page so Realtors® as well as home sellers and buyers in my area can benefit from your hard work.
Thank you so much John! That would be awesome! Thank you so much for asking and for doing so! I really appreciate your sharing.
Bravo, Jamie! It’s good to know there are other appraisers out there who take FHA minimum property requirements seriously and are working to educate others.
Thanks so much Dan! The more we can educate the public on what we do, the easier our work becomes. I appreciate your kind words!