My investment partner and I are about 3 weeks away from our target goal on our first rehab that we are going to refinance.
We will not be completely done the rehab when we refinance. We will be refinishing the floors, and remodeling the kitchen after we move in.
However, I am wondering when we refinance are there any random things that could hang us up in the refi process?
For example, the oven turns on but does not heat up, there is no railing in the stairwell and the back steps, and there are a few other things that we are unsure if we should tackle, or spend our time elsewhere.
I am wondering if there is a website that goes over the appraisal/inspection process and the points that the inspector will check.
The bank is not going to check to see if your appliances work. Just make sure they’re present.
As far as floors go, this can be tricky. I have seen banks NOT finance a home because the carpets had been removed and hadn’t been replaced at the time of appraisal. And remember, it’s an appraisal that a bank does NOT an inspection. Getting back to your floors, if it’s just hardwoods that need refinishing your all set, it won’t matter when you do them. If it’s a kitchen with no floor covering, that will be looked at just like the carpets (no go).
Make sure you clean up any construction debris BEFORE the appraisal is done. Basically you want it to look like someone could live in it RIGHT NOW. Hand rails should not be a hold up unless the bank requires a “CO” from your local building inspector. If the “CO” IS requiresd then all those little things will need to be finished.
The appraiser is going to take pictures. On one of my houses was through but I was changing the color of one of the rooms for my tenant. I was in there with ladders drop cloths etc. The appriaser had me moving the ladders and drop cloths around so that they would not show up in the picture. It had to look finished.
If you are counting on these “upgrades” for an increase in value, you will probably need to finish them first. The appraiser will complete the appraisal but leave it “subject to”. Which basically means he assigns a value of what it will be worth after the repairs are completed. A Lender will not accept the new value until the appraiser has seen/verified that the “subject to” conditions have been satisfied.
Otherwise, as Pete stated, a tidying up will probably suffice.
No buyer in his right mind will show the inspection report to the lender. Though I have a feeling that lenders will start to require inspection in the years to come. I am not sure where you are, but in Texas, inspectors have to be licensed through the Texas Real Estate Commission. They also must follow what is called the Standards of Practice for Licensed Inspectors. this details out what inspectors will be looking for when they go into the house. You can download a copy of all of that information, including the Standard Inspection Report Form that all Texas inspectors must use, at their site. http://www.trec.state.tx.us