CRA Home Loan Question - all advice welcomed

[Bryan Hildebrandt]

Hi BP!

I am in the process of closing on my first property that I plan on house hacking utilizing a CRA loan. The appraisal just came back and I’m having some issues that all advice are welcomed on.

The appraisal amount came back at the exact list price of the house. I was expecting it to be lower than list considering the surrounding area is a lot lower but I rolled with it. I know the sellers won’t come down on their price anyways and the numbers still work out on my end rent wise.

The problem arose at the end of appraisal report when it stated the appraisal was contingent upon the removal of a detached back guest house as it’s a “hazard”. The property consists of a main front house that has had a full rehab just done with a back guest house that needs a full rehab, it’s pretty bad but structurally sound (per inspector). My plan was to live in the front house, rent out the rooms, and get the vacant back house redone in the meantime.

The appraisal report states the guest house is an "FHA Repair Item". This threw me off as I was confused why the appraisal for a CRA loan would be based on FHA guidelines in the first place when I was never told that from my lender. When my lender was asked why the appraiser used FHA appraisal guidelines he stated "it's up the appraiser what guidelines they use" i.e. conventional, fha, usda, etc. This really confused me as I thought they each have different requirements and for the hired appraiser to just pick one seems off to me.

I primarily wanted the property in the first place for the rental potential of the back house combined with the front house. If it has to be torn down/removed I wouldn’t want the house anyways so I’m trying to keep it.

1. Do my lenders comments about the appraiser being able to pick what guidelines they use to appraise the house sound consistent with other CRA lenders? Seems weird to me.

2. Have other BP users had buildings be considered “hazardous” and what did you do to close? It will be vacant until it’s redone so it doesn’t seem to pose a physical hazard, and I can even board it up or whatever is needed to make it kosher with the appraiser.

3. I had my realtor reach out to my lender to have them order a new appraisal As-Is, waiting to hear back on if they will order it or not. There were some errors in the first appraisal (I.e. one of the 4 comps that were used is listed as “sold” when it’s still on the market and has been for almost 30 days with no pending offers) that I hope I can leverage to have the lender pay for the 2nd appraisal instead of me.

Any advice or comments are welcome and appreciated, I am new at this and love learning as much as I can.

-Bryan