FHA Appraisal ReportFHA Appraisal Report is what HUD uses to determine the appraised home value and the house market value. HUD will provide the FHA appraiser report at no charge to the winning bidder for use in obtaining a mortgage loan. The Buyer will have to paid for a new appraisal if their lender requires a new or updated one. If the Buyer is going to use any type of FHA insured financing(except a 203K loan), the lender must use the provided FHA Appraisal Report. The exception would be if the provided Appraisal Report is more than 6 months old on the date the sales contract is executed. The FHA appraiser idea of what the house market value is at the time of the FHA appraisal may be below the actual sale price. This may create a couple of problems. First problem happens when the Buyer is using FHA financing. If the Buyer's winning bid is more than the appraised home value(list price), the Buyer would have to bring the difference to closing.
An example would be if the house market value(list price)is $100,000. The Buyer believes the house market value is closer to $110,000 so he bids that amount and wins. If he uses FHA financing he would have to bring the difference, $10,000, to closing. Second problem is if you are an investor. If you also believe the house market value is $110,000 and you get lucky and get the winning bid for $100,000. The FHA Appraisal stays with the house for 6 months! You couldn't sell it for 6 months to a Buyer using FHA financing for more than $100,000, unless you did repairs to it. This is another reason to have a real estate agent that is experienced in HUD homes for sale. The experienced agent would make sure you didn't fall into one of these money losing mistakes.
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