August 10, 2016
A reader asks, “We just purchased our first home using an FHA loan. After 2 months in the house we had a typical Arizona monsoon storm come through. Our home flooded due to poor drainage on 3 sides of the house. The grading slopes towards the structure and not away. There are no gutters on the home nor a drainage system to move the pooling water away from our home. What recourse do we have when the FHA approved appraiser reported that there are no problems with the grading and drainage? Our home is damaged and our insurance does not cover flood damages.”
The FHA official site is clear on the subject of FHA appraisals in that the appraisal process is not meant to be a home inspection. The appraisal is intended to establish fair market value on the property to be purchased with an FHA mortgage and to make sure that property meets MINIMUM standards.
The FHA official site includes a document titled, “For Your Protection, Get A Home Inspection” which includes the following:
“Appraisals are Different from Home Inspections
An appraisal is different from a home inspection and does not replace a home inspection. Appraisals estimate the value of the property for lenders. An appraisal is required to ensure the property is marketable. Home inspections evaluate the condition of the home for buyers.” The document goes on to say that the FHA does NOT guarantee the value or condition of your “potential new home”.
Basically, a potential home owner should never purchase a home without paying for the optional but critically important home inspection. An FHA assigned appraiser is not required to closely inspect all the systems of a home, step out onto the roof, or be an expert in visually grading every system in the home.
A home inspector, on the other hand, is supposed to take a very up close look at the property and evaluate it based on training and experience. Borrowers who buy property without a home inspection are not making fully informed decisions about the property they purchase.
Those who pay for the home inspection make a far more informed purchase.
There are many resources you can use to find a qualified home inspector. Some people prefer Angie’s List, while others may choose to search the official site of the National Association of Home Inspectors. You can Google these organizations or ask local real estate agents who they might know that performs such services as trained professionals.
In answer to the reader question, if you seek information about legal recourse, you may need to consult a lawyer with expertise in real estate issues, but assistance from the FHA is unavailable unless you wish to register a complaint about the accuracy or competency of an FHA appraisal. You would need to contact the FHA at their toll-free number (1-800 CALL FHA) to learn how to register such a complaint.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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