12OK! You get to the bottom of Page 1 of the 1004 from and there’s that statement: “Are there any physical deficiencies or adverse conditions that affect the livability, soundness, or structural integrity of the property?” Since you are doing the appraisal for FHA, you know you must indicate there is peeling paint. Sometimes peeling paint means old paint. Sometimes old paint means lead-based paint, which must be properly disposed of since it could contaminate the environment if the disposal were not conducted per EPA guidelines.
So, which box do you mark? Do you mark yes there is a problem, and then make the report subject to the repairs of said problem? Or do you mark that there is not a problem and make the appraisal subject to the hypothetical condition that whatever problems there may be have been remediated properly and, in a workman-like manner?
I submit to you it’s perfectly acceptable to indicate that there are no problems because you’ve made the appraisal subject to the hypothetical condition that whatever problems there may be have been timely, properly, and correctly repaired in a workman-like manner. This step makes it clear that you understand there is a problem to be overcome. It also puts that responsibility back on the seller, the buyer, and/or the eventual lender, which is where the problem should be. It is not your problem. Your problem was to conclude a credible value opinion, which is exactly what you did.
You are not a painting contractor; therefore it does not fall to you to determine the cost of a new paint job. You are not an EPA-certified environmental contractor; therefore, it is not your problem to determine the cost and scope of work necessary to remediate the problem occasioned by the presence of the lead-based paint. Your job is to disclose there is an issue. Your job is not to fix that issue.
Now that you understand what to do when this situation faces you, go out there and create some value!
For more information on this subject, please download and listen to The Appraiser Coach Podcast Episode: