Part 2: Closing my first deal. What I would do differently. Appraisal 1

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Part 2: Closing my first deal. What I would do differently. Appraisal 1

Sean Link
Member since 2023 · 11 posts · 9 votes

During the appraisal process, the appraiser raised health and safety concerns regarding my property. Notably, they pointed out the lack of an egress window for an above-ground room, which they considered a health and safety issue. This feedback left me perplexed for several reasons:

  1. I was under the impression that an appraiser's role was to establish a dollar value for the property, not to provide safety assessments. I believed that was the purpose of hiring an inspector.
  2. I found it odd that the property was criticized for not having egress windows in an upstairs bedroom. To be clear, the room did have windows, just not ones large enough for a firefighter to fit through.

My lender informed me that despite the lack of egress windows, they could still approve the loan if the issue was addressed. In the end, I covered 75% of the costs associated with installing the egress windows. In retrospect, I wish I had heeded my realtor's advice and attempted to negotiate a 50/50 split for the expenses to rectify the egress window issue."

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  • Brad S.
    Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes
    3y

    @Sean Link

    1) As an appraiser (I am one), our lender clients typically ask that we notify them of any health and safety concerns. This is typically considered an assignment condition. specific to the lender/client. An example would be smoke and carbon monoxide (co) detectors - in the past we were not asked to note their presence or location, but in the past many years (I can't remember when it started), most lenders added those observations into their assignment conditions. Therefore, for most lender appraisals, we are now required to observe the smoke and co detectors in the house/units. Also, lenders typically want us to observe and report if there are quick release mechanisms on any window/door security bars, this seems similar to your window egress issue.

    I assume their concern is in a fire or other emergency, if something happens to the occupants, it puts their investment (loan/money) at risk, since the occupants may not be able to fulfill their loan obligations and/or may open the homeowners to other risk if they get sued by others who were affected. Example - a friend sleeping over who couldn't escape a fire due to limited egress. The family may sue the homeowner due to negligence, which may put their ability to repay the loan at risk, etc.

    2) Our job (as an appraiser) IS to assess whether that health and safety concern might affect value or marketability of the subject property. And while typically, missing smoke/co detector won't significantly affect either, a bedroom lacking the "legally required" egress, may point to an unpermitted addition or conversion, etc. This may contribute to an adverse affect on marketability or value, since any future construction on the property may include having to bring this part up to current code and standards. This can add significantly to costs and liability. I'm not saying that was the case in your house, but that may be another motivation for an appraiser to point out the egress sitch. 

    Also, that may cause problems for the insurance company if they know or find out about the egress issue after an incident. Maybe they would argue they aren't going to cover a claim since you signed something saying the property is properly up to code, etc. 

    Anyway, hopefully that gives you a little insight as to why the egress issue was observed and reported.

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