For the first time home-buyer, a completion report may bring confusion, anxiety and uncertainty. However, I’m here to tell you that these completion reports should bring ease and comfort to the first time home-buyer. These reports are requested by lenders when the original home appraisal report has a label of “Subject To,” and has recommended inspections and repairs. For the first-time home buyer, this might spark anxiety, but usually the seller has to pay for these repairs and inspections, unless otherwise written in the purchase contract.
When an Appraisal Report has a label of “subject to the following repairs,” or “Subject to the following inspections,” that typically means that a Completion Report will be needed. The Completion Report is a shorter form that indicates that the appraiser went back out to the home, and all of the conditions listed in the “Subject to” category have been taken care of. This can range from peeling paint, installing hand-railings for stairs or decks of a certain height, or the inability to access a crawlspace and/or attic. First time home buyers can be at ease, knowing that their first home being purchased will be safe, and also have the required repairs performed. And as mentioned before, these repairs are not covered by the borrower, but by the seller, unless an agreement has been made in the purchase contract.
When a first-time home-buyer looks at an Appraisal Report, they can feel overwhelmed. However, the Completion Report is relatively simple and is only one page. Any additional pages will be added by the Appraiser, and typically consists of photos of the areas that needed repair or inspection, to show that these conditions have been repaired, and inspections performed.
There are three labeled sections on the Completion Report: Summary Appraisal Update Report, Certificate of Completion, and Signatures. The Summary Appraisal Update Report section is filled out only if there is a Re-Certificate of Value, or if the Property was in an area recently hit by a Natural Disaster. In this case, the Appraiser will add notes if the value of the home decreased in any way since the original Appraisal Report. First-Time Home-Buyers typically do not have to worry about this section, as it is usually left blank.
The Certificate of Completion section is used if there have been any repairs or required inspections needing to be performed. The Appraiser will add what repairs and inspections were needed, which have been completed, and whether the home now conforms to FHA or USDA guidelines, depending on the loan program. This section usually has photos of the home, showing each repair item and each inspected item. The last section is the Signatures section, where the signature of the Appraiser and Supervisory Appraiser and their information is added, along with the Lender/Client.
For the First Time Home Buyer, this form is very straight-forward and should spark little confusion. Hopefully, this blog will help ease any concerns when First time Home-Buyers have to deal having a completion report ordered for a property they wish to purchase.
Venice Luckx is the Sales Director (NMLS ID: 1810923) at Society Mortgage. Hailing from Belgium, she now calls sunny South Florida home. With a background in Business Engineering, Venice brings a passion for finance and entrepreneurship to her role. She’s dedicated to simplifying the home-buying process and is committed to helping you achieve your financial goals.