203K Appraisals – How Do They Work?

203K Appraisal Process - How Does it Work?

203K Appraisals – How Do They Work

The 203K Loan appraisal process is mysterious and hard to explain.  Wait, no actually, it’s not. It’s pretty straight forward if you understand the how a 203K loan works. 

The main difference between a 203B (traditional FHA purchase) and the 203K appraisal process is the latter is based on AFTER REPAIR VALUE and the FHA 203B is based on AS-IS VALUE.

So, what does that mean? Well, when you are doing a 203K we consider the value of the property once the renovations are complete. To figure out the after repair value we need the contractor bid first.

If you don’t know the scope of the work then how can you determine what the house will be worth once your renovation is complete? Got it?

The key to the 203K appraisal process is having a detailed contractor bid. On the smaller streamline 203K renovations just itemize the bid, list in detail the scope of the work and provide it to the appraiser. No sweat.

Click HERE for a Pre-Approval!

On a larger Consultant 203K renovation we’ll need a little more detail. Square footage additions, floor plan changes, attic build-outs other structural repairs will probably need architectural drawings. In some cases you can scoot by with some contractor sketches, but in a lot of cities / counties across the USA you’ll NEED drawings to get permits.

If you are doing a Consultant 203K many lenders want the 203K Consultant’s SPECIFICATION OF REPAIR in addition to the contractor bid and, if needed, the architectural drawings.

Once the Appraiser has all the docs in hand he will analyze your scope of work and compare your renovated property to similar properties that have recently sold.

Basically, the appraiser is searching for renovated properties sold within one mile of your 203K project in the last 6 months. Easy right? Not really, it’s harder than you think. It takes more time and expect a 203K appraisal to cost more than a traditional purchase appraisal would.

So, your appraisal is complete, but you are a little short? No worries, FHA 203K Loans allow you to use 110% of the AFTER REPAIR VALUE! Appraisal heaven!

Still have questions? Having a 203K appraisal issue? Contact info is all over this website, I can probably help!

So, what are you waiting for? Get 203K PRE-APPROVED by clicking THIS  LINK!

More From 203K Mortgage Loans

• How to Write a FHA 203K Purchase Offer | 203K Loans | HomePath Renovation Mortgages – Georgia, Florida, Alabama, SC
• FHA 203K Loans – The Process
• 10 Ways Renovation Loans Create HUGE Value | 203K Loans | HomePath Renovation Mortgages – Georgia, Florida, Alabama, SC

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