Foundation Issues for the Appraiser

When we are out in the field we always will encounter a foundation as this is a integral part of the home.  Foundation systems come if a few different forms.  The most common in our markets where we area currently servicing (California, Arizona, Nevada, Utah, and Texas) is the concrete slab.  In older homes and more rural areas we may see several crawl spaces.  Crawl spaces are also typically what we will see in appraising Manufactured Homes as well.

When appraising homes our staff will typically observe the homes through the prism of an FHA observation.   When completing an FHA observation of a home we take into account FNMA and of course FHA guidelines.  While these guidelines evolve and change over time the foundation requirements have been the same.  FHA foundation guide for Manufactured Housing exists on the site. 

  1. Permanent Foundation: The home must have a permanent foundation that meets the local building code requirements. The foundation should be designed to support the structure and should be constructed of durable materials such as concrete or masonry.

  2. Engineering Certification: The foundation must be certified by a professional engineer or registered architect who is licensed to practice in the state where the property is located. The engineer or architect should inspect the foundation and provide a written certification stating that it meets the FHA's requirements.

  3. Compliance with HUD Handbook 4150.2 and 4000.1: The foundation must comply with the requirements outlined in the HUD Handbook 4150.2 (Valuation Analysis for Single Family One- to Four-Unit Dwellings) and the HUD Handbook 4000.1 (Single Family Housing Policy Handbook). These handbooks provide detailed guidelines for property valuation and the minimum property standards that must be met for FHA-insured loans.  For Manufactured Homes a new requirement is in the area of skirting.  The skirting is used to keep moisture (snow and rain) under home to a minimum, reduce wind and rodent or small animals from entering and possibly causing damage to under side on home.  The skirting is to be of a material that can hold up with strong wind.  So if it is of a vinyl paneling material this if fine as long as there is a permanent firm backing.

  4. Stability and Structural Soundness: The foundation must be stable and structurally sound. It should be capable of withstanding the loads imposed by the home and resisting natural forces such as wind, earthquakes, and soil movement.

  5. Permanence and Durability: The foundation should be designed and constructed to provide long-term support and durability for the home. It should be resistant to decay, deterioration, and other forms of damage.

  6. Proper Drainage: The foundation should have adequate drainage systems in place to prevent water accumulation and moisture-related issues. Proper grading and the presence of functional gutters and downspouts are important factors in ensuring effective drainage.  A fairly common appraisal issue that is called out to be repaired by simply filling holes in soil at the perimeter and ensure moisture drains away for the foundation walls.

Regarding cracks to the concrete slab the Appraiser will need to consider:

  1. Severity of the Cracks: The appraiser will evaluate the severity and extent of the cracks. Minor, non-structural cracks such as hairline cracks are generally considered normal settling and may not significantly impact the appraisal. However, significant cracks that are wide, jagged, or indicate potential structural problems may raise concerns.  Typically I teach that if the crack is large enough to fit two quarters stacked that the crack may be then considered significant enough to warrant the calling out a certified foundation engineer to further determine the condition and structural integrity.

  2. Structural Implications: The appraiser will assess whether the cracks affect the structural integrity of the property. If the cracks raise doubts about the stability or safety of the structure, it may lead to a lower appraisal value.

  3. Repairs and Professional Evaluation: The appraiser may consider whether any repairs have been made to address the foundation cracks. If professional evaluations or repairs have been completed by licensed contractors, it can provide reassurance and potentially mitigate concerns.

  4. Market Perception: The appraiser will also consider the market perception and impact of foundation cracks. Buyers may have reservations about purchasing a property with visible foundation issues, which can affect the property's marketability and value.

Any comments or further questions let us know how we can help.  We enjoy exploring new questions and invite you to let us know if Sun Point Appraisals, Inc can be of further assistance in your appraisal needs.

Phone:  888-595-0188



~ Paul Johnson / Sun Point Appraisals, Inc.