No appliances and cosmetic repairs affect conventional loan?

Question

I'm looking at buying a short sale property so as is condition. The floor in one room is partially unfinished (like they ran out of money to finished putting in the laminate but the quiet walk stuff and whatnot is down). Two rooms have carpet but it's not in great condition. Those two rooms also need to be painted (unfinished paneling and wall paper) there are no appliances. And the garage door needs to be replaced. The gutters may need replaced or may just need cleaned. Otherwise the home is in perfect working order. Will this affect my ability to get the conventional loan? What do I do if the appraiser says the home isn't in habitable condition (can they even say that?) These are all things we could have fixed and finished within a week of owning the property!

Evan Polaski · Answer

@Kathryn Hering, John has the best answer of talk to your loan officer.  They will be able to pull strings on the loan underwriting, quite frequently.  Depending on what you are paying, the appraisal could be a bit of an issue, as some appraisers will mark down even basic cosmetic issues, but as long as the price is appropriately reflecting the cosmetic issues, it likely won't be an issue.

Stephanie P. · Answer

@Kathryn Hering

This is from a 2018 publication from Fannie Mae that has to do with Frequently Asked Questions about appraisals.  I linked to it below:

https://singlefamily.fanniemae..."What is the expectation of appraisers when the subject has missing or no appliances?It is common for appliances to be considered personal property and not given any contributory value ifthey are not permanently attached to a property’s structure. However, it is at the appraiser’s discretion todetermine if the appliances are considered personal property or permanently attached to or built-in to theproperty structure. The appraiser should determine which appliances are common in the subject’s marketarea and, if any appliances are missing, analyze the impact on value and/or marketability."

I've had appraisals turned down for habitability because the property doesn't have a refrigerator or a stove and was considered not habitable.

Kind of a toss up when it comes to giving you a straight answer

Stephanie

John Warren · Answer

@Kathryn Hering your loan officer should be able to tell you this right away, but flooring and paint won't stop you from getting a conventional loan. Make sure there is running water, heat, hot water, etc. Livability has to be there, but conventional loans allow for a more distressed property.