FHA Appraisal Changes - FHA Responds To Declining Markets
It was nice while it lasted. Up to this point, FHA insured mortgages were immune to the many problems we’re seeing with appraisals in declining markets (like Atlanta). Unfortunately, new rules are in place for appraisals done after April 1st.
Highlights of new requirements for FHA appraisals:
- Requires a Market Conditions Addendum
- At least 2 comparable sales within 90 days of appraisal date
- A minimum of 2 active listings or pending sales in addition to the 3 closed comparables
- Various new adjustments for active listings and pending sales
- Must include original list price and any revised list prices
- Various others
What does it mean? We’ll have to see. We could see more difficulty for the appraisers to justify the price on the sales contract. So watch your contingency periods, give your lender enough time to get an appraisal AND have it reviewed by an underwriter, and be ready to come back to the listing agent to renegotiate if the value is not supported.