Freddie Mac Appraisals- Understanding the Requirement of Having Utilities Active for Inspection

Does Freddie Mac Require Utilities to Be On for Appraisal?

When it comes to real estate appraisals, Freddie Mac, a government-sponsored enterprise (GSE) that buys mortgages from lenders, has specific requirements that appraisers must adhere to. One of the most common questions that arise during the appraisal process is whether utilities, such as electricity, water, and gas, need to be on for the appraisal to be considered valid. This article aims to provide a comprehensive answer to this question.

Freddie Mac’s Position on Utilities During Appraisals

Yes, Freddie Mac does require utilities to be on for appraisal purposes. According to Freddie Mac’s guidelines, appraisers must verify that all utilities are turned on and functioning during the inspection. This is because having utilities on allows appraisers to assess the property’s condition accurately and provide a more accurate value.

Why Are Utilities Important for Appraisals?

The presence of utilities during appraisals is crucial for several reasons:

1. Comprehensive Property Assessment: With utilities on, appraisers can assess the property’s overall condition, including the heating, cooling, and electrical systems. This helps in identifying any potential issues that may affect the property’s value.

2. Accurate Value Determination: The presence of utilities enables appraisers to evaluate the property’s energy efficiency and assess the impact of energy costs on the overall value. This information is vital for lenders and buyers to make informed decisions.

3. Compliance with Freddie Mac Guidelines: Freddie Mac’s guidelines explicitly state that appraisers must verify that utilities are on during the inspection. Failure to comply with these guidelines may result in the appraisal being considered invalid.

Exceptions to the Rule

While it is generally required for utilities to be on during appraisals, there are some exceptions:

1. New Construction: In the case of new construction, Freddie Mac may allow appraisals to be conducted without utilities being on. However, the appraiser must provide a detailed explanation of the rationale behind this exception.

2. Special Circumstances: In certain cases, Freddie Mac may grant exceptions if the appraiser can demonstrate that turning on utilities would pose a safety risk or cause significant damage to the property.

Conclusion

In conclusion, Freddie Mac does require utilities to be on for appraisal purposes. This ensures that appraisers can provide a comprehensive and accurate assessment of the property’s condition and value. While there are exceptions to this rule, it is essential for appraisers and lenders to comply with Freddie Mac’s guidelines to avoid any complications during the mortgage process.