Just my thoughts...

Great article explaining why it takes so long for a short-sale.

 

From FHA: "Required repairs are limited to those repairs necessary to preserve the continued marketability of the property and to protect the health and safety of the occupants."

When you do FHA appraising you constantly have the 3 S's in your mind:

1. Safety - Any safety issues need to be fixed.

2. Security - I like to refer to this one as "saleability".  It basically refers to protecting the FHA insured mortgage by keeping the property in marketable condition.

3. Soundness - Are there any structural problems?  Floor joists rotted, or a leaking roof?

Having the appraiser do a FHA appraisal does not constitute a home inspection and it is always recommended you hire a qualified home inspector.

 

Here are 12 of the many things your FHA appraiser will look for:

1. ALL the utilities need to be ON at the time of inspection
2. Missing floor covering, fixtures, outlet covers, and/or exterior siding
3. Rotted wood or evidence of infestation
4. Chipping or peeling paint - if built prior to 1978, possible lead paint issues
5. Windows not opening or closing - need 2 means of egress from bedrooms
6. Roof with less than 2 years of economic life or with missing or damaged shingles
7. Garage must have drywall on any wall adjacent to living areas
8. Crawl space should be at least 18 inches, with no standing water, or debris in the crawl space
9. Attic must have insulation and access if there is an attic
10. HVAC, plumbing, and electrical must function properly
11. Electric garage door must have a reverse stop
12. Wells must be located 50' from septic tank, and 100' from absorption field.

If the property has any of these issues they need to be cured (fixed) before closing.

HUD 4150.2 Handbook for appraisals.  This is the original bible for appraisers and it is constantly updated by issuance of new Mortgagee Letters...

FHA Appraiser Resources -Bottom right of page.  The Mortgagee Letters are constantly updated and the appraiser needs to keep track of this information.

The difficulty in appraising green building is the availability of comparable sales.  It is unusual to find comparable properties with the same green features as the subject.  Therefore, how do appraisers come up with an adjustment for the feature?

First we need to determine if the green product is market accepted.  Would a typical buyer be able to operate it?  This comes from knowing your market area.

I appraised a home in Amherst, NH back in '02, when values were increasing, high demand/short supply, and under 3 months marketing times (so much easier to do my job back then).  The house was a passive solar envelope home...a very simple way to heat your home for almost nothing.  There was a forced-warm air heat system fueled by solar, oil, or electric.  The control panel in the basement looked like a Nasa control station.  It was mind-boggling, certainly would confuse the average home-buyer.  This would not be market accepted.  Keep it simple.
 
Cost savings is the main way I figure out my energy efficient adjustment, but the cost savings is not always market equivalent for energy-efficient homes.  It is a way to justify the adjustment.   Generally you can find good sources for cost savings on the web, or talk to green builders.

Every sub-market will be different.  An entry-level home would most likely not see much, if any, added value. 

There is a great subdivision here in Milford, NH called Sunview Homes (great name).  The houses were all placed to take advantage of the sun.  Heating/cooling costs are minimal and they all had quilted window coverings.  Most agents in the area don't market them as passive solar homes.  Is there value there?  If the buyer doesn't know about the energy efficiency then they certainly will not pay more for it.  The biggest problem I have when I appraise these homes is finding documentation supporting they are passive solar.  I've researched the line of deeds since the properties were built and haven't found anything.  Because of my interest/knowledge in green/energy efficient building, and my discussions with homeowners who purchased the homes when they were built...I know.

There is so much to discuss on this topic, green building is such an expansive topic.  This is only the beginning.

Google my favorites:  passive-solar, geo-thermal, envelope homes, or sustainable design.

Some interesting links:

http://www.pr-inside.com/earth-advantage-institute-addresses-disparity-r1296769.htm

http://www.greenhomebuilding.com/QandA/financial/appraising.htm