Why Is the Appraiser Requiring Repairs? Understanding Mandatory Fixes in Home Appraisals

When buying or refinancing a home, one of the critical steps in the lending process is the appraisal. Real estate appraisers assess the home's value to ensure the lender isn’t financing more than the home is worth. However, sometimes an appraiser may require repairs before the loan can be approved. If you’re a homebuyer, seller, or real estate professional, understanding why these repairs are required and which loans have stricter guidelines can help you navigate the process smoothly.

Why Do Appraisers Require Repairs?

Appraisers are not home inspectors, but they are responsible for identifying conditions that could impact the home's safety, security, and livability. When appraisals are conducted for government-backed loans, such as FHA, VA, and USDA loans, the property must meet specific minimum property standards (MPS) before financing can be approved. Even conventional loans may have repair requirements if the damage significantly affects the home’s value or marketability, but typically conventional loans will be looser on the requirements.

Common Required Repairs

Here are some of the most frequently required repairs in home appraisals:

  1. Peeling Paint – For homes built before 1978, peeling or chipping paint can be a lead-based paint hazard. This is especially scrutinized in FHA, VA, and USDA loans.

  2. Roof Issues – Significant roof damage, leaks, or a roof nearing the end of its lifespan may need repair or replacement to ensure the home is structurally sound.

  3. Foundation Problems – Cracks, shifting, or signs of structural instability can make a home ineligible for financing until properly addressed.

  4. Exposed Electrical Wiring – Any visible electrical hazards, such as missing outlet covers or exposed wires, must be corrected to ensure the home’s safety.

  5. Plumbing Issues – Non-functioning or leaking plumbing systems can be flagged, as they affect the livability of the home.

  6. Heating & Cooling Systems – The home must have a functional heating system, and in some cases, air conditioning may also be required.

  7. Water Damage & Mold – Signs of active water damage or mold could indicate more significant underlying issues and must be addressed.

  8. Missing or Broken Handrails – Stairways with missing or loose handrails are considered a safety hazard.

  9. Hazardous Conditions – Broken windows, missing flooring, or other safety concerns can result in required repairs before loan approval.

Loan Types and Repair Requirements

While repair requirements vary by loan type, here’s a general breakdown:

  • FHA Loans – The Federal Housing Administration requires homes to meet strict safety and livability standards. Any significant deficiencies must be repaired before closing.

  • VA Loans – The Department of Veterans Affairs also has strict property requirements to ensure the home is safe and move-in ready for veterans and service members.

  • USDA Loans – These loans require homes to be in good condition with no safety or structural issues.

  • Conventional Loans – While generally more lenient, conventional lenders may still require repairs for issues that impact value, safety, or marketability.

What Happens If Repairs Are Required?

If an appraiser notes required repairs, they must be completed before the loan can close. This can be handled in a few ways:

  • The seller may agree to make the repairs before closing.

  • The buyer may negotiate with the seller for repair credits.

  • In some cases, an escrow holdback may allow the buyer to complete repairs after closing, but this depends on the loan type and lender approval.

Final Thoughts

Periodically, Fannie Mae and Freddie Mac, as well as FHA, VA, and USDA may update their minimum property standards or repair requirements. In addition, repair requirements may vary by lender or loan program for conventional loans. The items listed above and discussed today have been the standard for a while now, however, the requirements for conventional loans may be changing this year and we will share an update later this year once changes are made and officially put into practice.

If you’re buying or selling a home, understanding appraisal-required repairs can prevent surprises and delays. Working with an experienced real estate agent, lender, and appraiser can help ensure a smoother transaction.

At Definitive Valuations, we’re here to provide clear, accurate, and fair appraisals to help all parties navigate the home buying process confidently. If you have questions about appraisals or required repairs, contact us today! (256) 828-9275

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