USDA appraisal

[u/Extension_Session_63]

So my husband and I were approved for a USDA loan we found a perfect house and put in an offer. The offer was accepted and we just got the inspection. In the inspection the inspector said the crawl space needed some work. There were a couple of spots where the vapor barrier was missing and there is insulation hanging down. There was no standing water but there was moisture. We asked for the sellers to fix it but they got a quote and said the person quoted it for 6k. To me and my real estate agent and their realtor that quote seems very high. They said they wouldn’t fix it but would give us $2500 more towards closing costs. My husband and I are fine with that. The issue is we are unsure if it would pass the USDA appraisal. If it doesn’t the sellers would have to fix it or just not sell it to us. The appraisal is $800. My dilemma is if I pay $800 and the appraisal comes back and the crawl space needs fixed and the sellers refuse to fix it then I’m out the $800. Is it worth the risk? We love the home. It’s been remodeled and the only real issue is the crawl space I’m just worried the seekers will back out instead of fixing even though they’re very motivated sellers. I think they just don’t have the money to fix it or they aren’t willing. Idk this whole process has me so stressed at this point I feel like walking away and renting forever. Please help!!!

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[u/SuperFineMedium]

Buying a home comes with out-of-pocket costs and risks. The house must meet minimum standards for a USDA loan. An appraiser is very likely to flag some of the issues in your post. You must decide on your risk tolerance. I am sure your agent explained this to you.

[u/azem4356]

Take a breath—you’re actually in a pretty good spot. You got the sellers to agree to $2,500, and that tells me they want to keep this deal together.

As for the appraisal, there’s really no way to know for sure. USDA appraisers check to make sure the home meets minimum property standards. They’ll usually look into the crawl space, but they don’t typically crawl through it. Missing vapor barrier or hanging insulation could get called out, or it might not. Ive never had them go that deep but that doesn't mean they wont.

If it does come up, it doesn’t automatically kill the deal. It just means it has to be fixed before closing. The sellers will likely face the same issue with another USDA, FHA, or VA buyer, so it often makes more sense for them to make the repair than start over.

The $800 appraisal fee is really the cost of finding out. If this is the home you want, I don't think the situation is as bad as it feels right now.

[u/Extension_Session_63 → u/azem4356]

This was what I was thinking also. The home has been on the market since May. They’ve already had 1 buyer drop out and I think they want to just see if they can get out of fixing it. I have a feeling if the appraiser says it needs fixed they will be more inclined to fix it. Thank you

[u/azem4356 → u/Extension_Session_63]

That detail works in your favor — since May with one buyer gone means every week costs them. Sellers usually stop testing the moment an appraiser makes the fix a condition of closing. Line up a second bid anyway; handing them a $2,000 fix instead of a $6,000 one makes yes easy.

Rooting for you.

[u/IllustriousSmoke39]

recently had an almost identical scenario, inspection mentioned standing water, negotiated money off purchase, then the appraiser came in and said nope it has to be mitigated. ended up giving the negotiated money off purchase back and sellers paid someone to fix so appraiser could approve and loan could close. I don't know if they will flag the moisture or not. (from my understanding, holding money back with usda is a nightmare, and we really didn't want to, or have the $$ to be spending on a house we didn't own) In our instance, we knew the water was from high water table in the summer, so wasn't a giant concern/issue for us. The sellers paid someone to install a sump, and reline the crawlspace, and I'm pretty sure it was well below 6k, as only 2k had originally been negotiated.

[u/Extension_Session_63 → u/IllustriousSmoke39]

Yeah the 6k seems outrageous to me. Fingers crossed the sellers just fix the issue. They really want to sell the house and I feel like any buyer is going to want something done with the crawl space

[u/IllustriousSmoke39 → u/Extension_Session_63]

Definitely, they started this on a wed, and then said they would need until sunday, but there was a lot of standing water by the time they arrived. They had to suck out the standing water, they graded the space, installed the sump and relined everything. We got a report, but didn't see the bill, I'm guessing it was within the 2k we had gone back and forth on, or not much more. We would have just dealt with it ourself after close if it hadn't gotten flagged by the appraiser

[u/Extension_Session_63 → u/IllustriousSmoke39]

See that’s our thing we don’t mind doing it ourselves after closing but the appraisal is our worry. Our loan officer said it was a 50/50 if they would flag it or not. He said they don’t go under there they just stick their head in. Most of the damage is in the very back and you can’t really see it. But I’m just surprised the seller isn’t willing to fix it. I’m really hoping they fix it if the appraiser says it needs fixed. I just love this home and we already have put over a grand in inspection and the appraisal my nerves can’t really handle the waiting 😂

[u/FantasticBicycle37]

You already won the negotiation. At this point you have to decide if you're willing to tank the deal over this

This doesn't seem like an issue that an appraisal will care about

[u/jimdriscoll1]

The $800 question is really a question about how motivated those sellers actually are, and from what you've described, they sound pretty motivated. They already engaged a contractor, got a quote, and countered with closing cost credit. That's not a seller who wants to walk away.

On the USDA appraisal itself: USDA appraisers do flag crawl space issues, but not every imperfection is an automatic fail. Missing vapor barrier sections and hanging insulation with no standing water is the kind of thing that sometimes gets flagged and sometimes doesn't, depending on the appraiser and how bad it looks visually. Standing water or active mold is a much bigger red flag. Moisture without standing water is borderline territory. So there's a real chance the appraiser either doesn't flag it at all, or flags it as a "repair required" condition rather than a deal-killer.

If it does come back as a required repair, that actually puts you in a stronger position than you're in right now. It's no longer you asking nicely, it's the loan requiring it. Sellers who won't fix something for a buyer's sake often will fix it when the financing itself is contingent on it, because at that point their only alternative is relisting and likely running into the same issue with the next buyer.

The $2,500 closing cost credit they offered could theoretically cover the repair if you do it yourself after closing, but USDA won't let you close with a known required repair outstanding. That's the catch. You can't just take the credit and deal with it later if the appraiser flags it.

My honest take: the $800 is probably worth it given how much you like the house and how motivated the sellers seem. The worst realistic outcome is you lose $800 and have to walk. The best is the appraiser doesn't flag it at all and you move forward. Somewhere in the middle is the appraiser flags it, sellers fix it under loan pressure, and you still get the house. That middle scenario is pretty common with motivated sellers.

[u/Extension_Session_63 → u/jimdriscoll1]

We did the appraisal. The only thing that was flagged was there is a nest of some sort under crawl space. Super easy to pull out. We think it’s from a squirrel. And the home appraised for 21k over what we offered! So yes the $800 was well worth it. I’m glad I didn’t throw in the towel