If the subject of the appraisal assignment for a new FHA-insured mortgage is a HUD Real Estate Owned (REO) property, the requirements for the appraiser are the same as for any other property.
If the utilities are turned off at the time of inspection, the Appraiser must ask to have them turned on and complete all requirements under Mechanical Components in Handbook 4000.1, Section II.D.3.g. However, if it is not feasible to have the utilities turned on, then the appraisal must be completed without the utilities turned on or the mechanical systems functioning.
If the utilities are not on at the time of observation and the systems could not be operated, the Appraiser must:
• render the appraisal as subject to re-observation;
• condition the appraisal upon further observation to determine if the systems are in proper working order once the utilities are restored; and
• complete the appraisal under the extraordinary assumption that utilities and mechanical systems, and appliances are in working order.
The Appraiser must note that the re-observation may result in additional repair requirements once all the utilities are on and fully functional.
For more information, see Handbook 4000.1 Section II.D.3.g. available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh