What are the most common condition issues that are flagged on an appraisal?
The 5 most common issues we have seen are rotten wood, roof issues including ceiling water stains, paint condition, water heater issues & electrical problems. Any issues that impact the safety or health of occupants, or those that are considered to be structural soundness issues are likely "flags".
1) Wood rot & Dry Rot - Fascia wood rot is present on many homes in Florida and is a relatively simple fix. This condition will almost guarantee a repair requirement in the appraisal report (and it makes the home less attractive to potential buyers). Significant portions of wood that are visibly rotten will likely result in a lender repair condition regardless of the loan type. The most common location where we see wood rot is along the roof line (soffit and fascia), however damaged siding on wood frame homes is also common.
2) Roof Issues - Appraisers are not home inspectors and they do not typically go on top of a roof. This means they have to rely on observations of the roof from ground level and interior ceilings for signs of potential issues. The appraiser will typically call for a roof inspection if your roof has any evidence of leaks, water intrusion, rotten wood or other defects.
3) Water Heaters- Significant water heater issues will be a problem regardless of the loan program because they are usually a safety issue. The most common issues we see are water heaters located outside of the home uncovered (exposed to the elements), rusted sections, or improper venting of the pressure relief valve.
4) Paint Condition - Hopefully you are already aware that chipping/peeling paint on a pre-1978 build is a potential health hazard due to lead based paint concerns, and are aware that any lender or loan program may flag paint surface issues for pre-1978 builds.
Many people are surprised to find out that lack of paint on exterior wood or defective paint surfaces on exterior wood can also be a problem for homes built after 1978. Exterior "raw" wood that is not painted is not acceptable because it leaves the subsurface exposed to the elements. Flaking paint and peeling paint can also be a problem for the same reason, even if the build is post 1978.
Fannie Mae guidelines state: "If the dwelling or related improvements were built after 1978, the Appraiser must report all defective paint surfaces on the exterior and require repair of any defective paint that exposes the subsurface to the elements".
5) Electrical Problems - There are a million potential electrical issues, but we are focusing here on the obvious ones. If you have exposed electrical lines that are not capped and are a clear potential shock hazard, you are very likely to run into appraisal issues. Regardless of whether the appraiser calls for a repair or not, the appraiser is required to report the condition.