What Does “Subject to Repairs” Mean on an Appraisal?

Sometimes the most important thing on an appraisal isn’t the value - it’s the phrase “subject to repairs.”

An appraisal isn’t the same thing as a home inspection. An inspector takes a detailed look at the home’s condition for the buyer. The appraiser’s job is to estimate value, but the appraiser is also the lender’s eyes on the property.

That means the appraiser looks for issues involving safety, soundness, and structural integrity - things like obvious foundation problems, termite damage, a damaged roof, or even a front door that won’t lock.

When the appraiser finds a significant issue, the appraisal must be completed “subject to” repairs. Instead of saying, “The home is worth this amount today,” the appraisal says, “The home will be worth this amount once these repairs are completed.”

As a general rule, the loan can’t close until the work is finished. The lender may also require another professional - such as a structural engineer or pest inspector - to confirm that the problem has been corrected.

That can put a buyer in a difficult position. You probably don’t want to repair a home you don’t own yet, and the seller may be unable or unwilling to do the work. A renovation loan can sometimes solve that problem by including the repair costs in the financing and allowing the work to be completed after closing under the lender’s supervision.

One final tip: Your inspection report is for your benefit. Unless your loan officer specifically asks for it, there’s no reason to send the full report to the lender and make every item in it part of the loan file.

And remember — it’s always okay to ask. We’re here to help you get home.