We've worked with several loan appraisers and the rules aren't easy to quantify. For example, if a home comes with appliances, some loans require they must be operational for it to appraise (to get the loan). If the home doesn't come with appliances, there are specific requirements for some loans, and one of them is that the home have potable water and a functioning stove hookup. Now here's the rub- how does an appraiser know if there is a functioning stove hookup if there isn't a functioning stove to test it with? They don't bring stoves with them to test them with, and they aren't electricians and lack the ability to test the hookup without a stove there.
So indirectly, the home needs a functioning stove in order to qualify that the home has a functioning stove hookup. There are ways around this requirement without requiring a stove, but they usually cost more than installing a stove, especially since buyers typically are turned off from buying homes that are missing things like stoves.
Other appliances (washers, dryers, etc) aren't required to appraise the home. Some loans require a functioning refrigerator under the "habitable" rules, but most only require that if there is a refrigerator, that it works. That's why it's good to be present when the home is inspected- if the refrigerator doesn't work, you can tell them that it doesn't come with the sale, and they can note that and the underwriter won't kick the loan back for having a non-functional appliance unless it's an appliance that is required to be installed and functional for the loan to be approved. The appraiser is supposed to deduct the value of missing appliances from the home valuation. So lets say that a home comes with no appliances, and the loan product doesn't require any, and the appraiser takes $10k off the appraisal for not having any appliances, and that is enough to make the home valued less than the accepted offer price. Now we have a problem if the buyer doesn't have $10k extra laying around to make up the difference the loan isn't covering, and the seller doesn't want to give them a $10k credit at closing to make up the difference. Usually not a problem in Hawaii because the appraiser gets a copy of the offer and usually tries their best to value the home at the accepted offer price. But it doesn't always happen. When we lived in Alaska the county we lived in forbade the appraiser from knowing what the accepted offer price was, and had to rely solely on market and tax valuations to make their determination, and the appraisals were frequently much higher or lower than what the buyer and seller agreed to, and it caused a lot of transactions to fall through.
I believe it's VA loans that require that all the window screens be fully functional (no holes, gaps, or missing screens). But the loan doesn't require window screens. So if one is missing a screen, or has one with a hole in it, the home can pass the appraisal by removing ALL the window screens prior to inspection.
And then there is the "potable water" thing.... that's a nightmare on catchment that could use it's own thread if there was anybody who fully understood it, but since individual underwriters and appraisers can't agree, such an expert doesn't exist yet.
Okay... last wrinkle, and that's the loan officer's angle. For many of these government-backed loans, the loan officer is the one that has to order these tests and appraisals, and they are usually paid for at escrow. But what if there isn't an escrow? Because the deal falls through. Who pays for the test or appraisal? It depends, but in most brokerages, the loan officer is personally liable to pay them. This is to prevent them from approving risky loans. So if you're trying to get a home loan and you think the information the loan officer is requesting seems unreasonable, it is because they want to make DAMN sure the deal can go through before they order appraisals or tests that they are responsible for paying. For example, if they qualify a buyer and loan signing day approaches and they blew their down payment in Vegas and the deal falls through, the loan officer isn't making any money on the loan, AND paying out of pocket for the tests / appraisals they ordered. So many of them will require or request things that are above what the underwriter requires. So if you ask 5 loan officers if a USDA loan requires a stove in the kitchen, you could get 5 different answers. Some of them may not know the right answer, and some of those won't care, because they aren't risking paying for a $1200 appraisal from their kid's college fund to find out. So the answer might be different because it IS different depending on the individual brokerage or even officer within that brokerage. You could shop around looking for an "easy" loan officer, but at the end of the day the developer knows that the simplest solution to all these problems is to put appliances in the house.
So going back to blowing the down payment in Vegas (or wherever)... it happens more often than one would think, that's why the loan officers want to make sure that people aren't barely scraping by to make the deal go through, even though most of us are. The loan we got for the home we live in, I had to provide a copy of past bank statements, and a $6k deposit was flagged. They wanted to know where it came from. They could see deposits every 2 weeks from my job, but where did the $6k come from? After all, I was using it as part of my down payment. I thought it was ridiculous that I had to explain, in detail, where it came from. I sold a car for $6k because the barge companies wanted almost that much to bring it here. Seemed like a better deal to buy something here (still debating if that was a good decision). They even wanted to know the name and contact information of the person who bought it so they could confirm. Ridiculous! I didn't know at the time it was probably a personal decision the individual officer made to protect their own interests. This was a conventional mortgage (not government backed). The home didn't have any functioning appliances other than a stove, and we were told it was "required" to have one, so good that it was there. Was it REALLY required? I'll never know.
So indirectly, the home needs a functioning stove in order to qualify that the home has a functioning stove hookup. There are ways around this requirement without requiring a stove, but they usually cost more than installing a stove, especially since buyers typically are turned off from buying homes that are missing things like stoves.
Other appliances (washers, dryers, etc) aren't required to appraise the home. Some loans require a functioning refrigerator under the "habitable" rules, but most only require that if there is a refrigerator, that it works. That's why it's good to be present when the home is inspected- if the refrigerator doesn't work, you can tell them that it doesn't come with the sale, and they can note that and the underwriter won't kick the loan back for having a non-functional appliance unless it's an appliance that is required to be installed and functional for the loan to be approved. The appraiser is supposed to deduct the value of missing appliances from the home valuation. So lets say that a home comes with no appliances, and the loan product doesn't require any, and the appraiser takes $10k off the appraisal for not having any appliances, and that is enough to make the home valued less than the accepted offer price. Now we have a problem if the buyer doesn't have $10k extra laying around to make up the difference the loan isn't covering, and the seller doesn't want to give them a $10k credit at closing to make up the difference. Usually not a problem in Hawaii because the appraiser gets a copy of the offer and usually tries their best to value the home at the accepted offer price. But it doesn't always happen. When we lived in Alaska the county we lived in forbade the appraiser from knowing what the accepted offer price was, and had to rely solely on market and tax valuations to make their determination, and the appraisals were frequently much higher or lower than what the buyer and seller agreed to, and it caused a lot of transactions to fall through.
I believe it's VA loans that require that all the window screens be fully functional (no holes, gaps, or missing screens). But the loan doesn't require window screens. So if one is missing a screen, or has one with a hole in it, the home can pass the appraisal by removing ALL the window screens prior to inspection.
And then there is the "potable water" thing.... that's a nightmare on catchment that could use it's own thread if there was anybody who fully understood it, but since individual underwriters and appraisers can't agree, such an expert doesn't exist yet.
Okay... last wrinkle, and that's the loan officer's angle. For many of these government-backed loans, the loan officer is the one that has to order these tests and appraisals, and they are usually paid for at escrow. But what if there isn't an escrow? Because the deal falls through. Who pays for the test or appraisal? It depends, but in most brokerages, the loan officer is personally liable to pay them. This is to prevent them from approving risky loans. So if you're trying to get a home loan and you think the information the loan officer is requesting seems unreasonable, it is because they want to make DAMN sure the deal can go through before they order appraisals or tests that they are responsible for paying. For example, if they qualify a buyer and loan signing day approaches and they blew their down payment in Vegas and the deal falls through, the loan officer isn't making any money on the loan, AND paying out of pocket for the tests / appraisals they ordered. So many of them will require or request things that are above what the underwriter requires. So if you ask 5 loan officers if a USDA loan requires a stove in the kitchen, you could get 5 different answers. Some of them may not know the right answer, and some of those won't care, because they aren't risking paying for a $1200 appraisal from their kid's college fund to find out. So the answer might be different because it IS different depending on the individual brokerage or even officer within that brokerage. You could shop around looking for an "easy" loan officer, but at the end of the day the developer knows that the simplest solution to all these problems is to put appliances in the house.
So going back to blowing the down payment in Vegas (or wherever)... it happens more often than one would think, that's why the loan officers want to make sure that people aren't barely scraping by to make the deal go through, even though most of us are. The loan we got for the home we live in, I had to provide a copy of past bank statements, and a $6k deposit was flagged. They wanted to know where it came from. They could see deposits every 2 weeks from my job, but where did the $6k come from? After all, I was using it as part of my down payment. I thought it was ridiculous that I had to explain, in detail, where it came from. I sold a car for $6k because the barge companies wanted almost that much to bring it here. Seemed like a better deal to buy something here (still debating if that was a good decision). They even wanted to know the name and contact information of the person who bought it so they could confirm. Ridiculous! I didn't know at the time it was probably a personal decision the individual officer made to protect their own interests. This was a conventional mortgage (not government backed). The home didn't have any functioning appliances other than a stove, and we were told it was "required" to have one, so good that it was there. Was it REALLY required? I'll never know.