HUD Information – Inspections


HUD (through their local, contracted vendors) performs three vital inspections in preparation for putting a house on the market.

1. The first is done by one the three Field Service Management companies:

The local company cleans the house, re-keys the locks, and mows the grass. They make the house safe and secure. They also do a HPIR (HUD Property Inspection Report) from which they derive the PCR (Property Condition Report). The PCR covers 7 areas: heating and cooling, electric, appliances, plumbing, water heater, sewer & septic, and roof. Those report findings are then posted with the property on HUD’s website. These are not exhaustive inspections but are only designed to discover major flaws.

2. The second inspection is done by the listing broker who does a BPO (Broker Price Opinion) which determines the likely price at which the property will sell for in 30 days or less.

3. The third inspection is done by a certified FHA appraiser. They are looking for property eligibility of FHA financing and they derive a report called a PCS (Property Condition Summary). This is also posted with the property on HUD’s website. The appraiser lists those items that are needed to bring the property to minimum FHA standards and the associated estimated costs. If there are no requirements, the property is deemed insurable for a FHA203B loan. If there are $5000 or less in estimated costs, it is eligible for an FHA203B loan with the repairs held in escrow by the lender until repairs are completed. If there are more than $5000 in repairs the property will be uninsured and can only qualify for FHA203K financing.

The appraiser estimates the current value of the house in its AS IS condition and that becomes the list price.

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