Appraiser Required Repairs

This information is intended to explain to home buyers & Real Estate Agents all the possible solutions for appraisal required repairs.  Every ones situation is different so don’t hesitate to call and run the scenario buy us.  Most of the time we can find a way to make it work and get the transaction closed. There shouldn’t be any transaction that fall’s apart because the lender cant accommodate the repair situation. So, lets address our options on these homes deemed un-financeable by other agents and lenders.

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Conventional, FHA, VA & Rural Development Repair Options

Option 1: Seller Completes the repairs

This is the preferred option because it typically costs the buyer little to no money, repairs are done prior to closing, and the property is re-inspected prior to closing. For bank owned homes (foreclosures) often the bank will not do any work to the property. It can’t hurt to ask, however if the bank will not complete the repairs there are other options.

Option 2: Repair Escrow

With this option repairs are done after closing.  Here’s how it works:  More Details

    1. Obtain a bid from a licensed and insured contractor for only the required repairs (2 bids required for FHA & VA). Buyers are not allowed to complete ANY repairs themselves.
    2. Amerifirst reviews and approves repair escrow accordingly
    3. Closing on the home occurs and escrow is funded. The key is “where does the money for the repair escrow come from?”
      • Seller could fund the escrow account out of their closing proceeds
      • Buyer could fund the escrow account by bringing additional funds to the closing.
      • Rural Development Only – if the home appraises for more, repairs can be financed into the loan up to the appraised value.
    4. Repairs are completed by the contractor. Now that we closed and ownership transferred the clock is ticking and the contractor has 2 weeks to get the repairs completed.
    5.  Once repairs are complete the appraiser will verify it by reinspecting the property and checks are cut to the contractor.

Option 3: Switch it to a  Renovation Loan

With a renovation loan you can finance in both the appraiser required repairs and may other things you want to do to the home.

  1. Obtain a bid from a licensed and insured contractor for the required repairs and any other repairs the buyer wishes to complete
  2. Appraisal ordered and completed
  3. Bids tweaked if needed
  4. Amerifirst reviews bids & validates the contractors
  5. Closing occurs and repairs are financed into the loan.
  6. Contractor receives half the money upfront (typically some loans pay out in a series of draws depending on the work being done)
  7. Work completed and property is re-inspected
  8. Check for remaining balance cut to the contractor

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Understanding Property Tax Increases

Notice of Assessment
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Many home buyers have been facing a very challenging market over the past few years. The current supply of homes on the market just can’t keep up with the huge demand out there. It’s not uncommon for a home to come on the market and be sold in a matter of days after receiving multiple offers. With this fierce competition, prices have increased substantially over the last few years and has made it challenging for home buyers to find a home within the budget/payment they had planned for.  Many go over budget to get the home they want only to have another blow to that budget the following year due to the property tax increase.  This increase on the property tax portion of the mortgage payment can really hurt home owners enough to create a financial strain.

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