FHA appraiser found issues inspection company completely missed

2 Replies

I just got a call from my loan officer and I'm kind of worries, my escrow is set to close on the 26, it's an FHA loan and the appraiser just did the report on Monday. We did a walk through a few weeks back and I had an inspection done the next week, both brought up no abnormal problems although we did wake one of the tenets up at 5:30pm but I use to work nights and didn't think much of it. Anyway it's a triplex with a main front house and two units in back; the front house seems to be occupied by a mother father and an adult son who has a fixation with Scarface (go figure why he still stays at home). Didn't meet the two back tenets but again the walk through and the inspection didn't show any major problems.

So my loan guy tells me today that the appraiser might label the property C5, which from what I understand is about as bad as a 10 mile wide asteroid hitting the earth as far as getting a loan approved. She said she smelled drugs, saw people passed out in one unit and in another unit there was dog crap and urine on the floor. The dog crap part didn’t make a difference to me as the unit is covered in tile floors and I plan on kicking everyone out so I can hand pick my renters. But can an appraiser label a property C5 due to nonstructural issues? Does it sound like one of the units is a drug house? Since my due diligence period is over what will happen to my earnest money if my loan kicks or the deal is stopped?

Triplex in phoenix AZ

Buy price 120k with seller paying closing cost

Rent is $500 per unit.

Lenny

I'm a little confused by the heading of this post,  Are you saying the home inspector's job is to identify if the tenants are drug users?  You should review the scope agreement for the inspection.  That is not the intent of a home inspection.  It sounds like you failed to do your due diligence.

Originally posted by @Ron K. :

Lenny

I'm a little confused by the heading of this post,  Are you saying the home inspector's job is to identify if the tenants are drug users?  You should review the scope agreement for the inspection.  That is not the intent of a home inspection.  It sounds like you failed to do your due diligence.

 From my understanding a property can only be listed C5 due to serious structural issues, nothing about how messy or drunken or drugged up the renters are can cause such a designation, so if it has been listed C5 than the inspector must have missed something right?

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