Published December 13, 2025
What Colorado Home Sellers Should Know About Appraisal Red Flags
Preparing Your Colorado Home for an FHA or VA Appraisal
What Home Sellers Need to Know
Writte by Bryan Messick, Broker, United Real Estate Prestige Denver
Why This Matters to You
If your buyer is using an FHA or VA loan, the appraiser will not only determine your home's value—they'll also inspect for safety, structural, and health issues that must be corrected before the loan can close.
The good news: Most homes pass without major issues. With a little preparation, you can avoid delays and keep your sale on track.
What you need to know: Required repairs must be completed, or the buyer may have the right to terminate the contract without penalty.
What FHA & VA Appraisers Look For
Both FHA and VA appraisers are instructed to flag health, safety, and structural concerns. Here are the most common items that may require repairs:
Health & Safety
- Peeling, chipped, or flaking paint (especially pre-1978 homes—lead hazard)
- Missing or non-working smoke detectors and CO detectors
- Broken or exposed electrical wiring or outlets
Structural Issues
- Foundation cracks, settlement, or water intrusion
- Roof leaks or roofs with less than 2-3 years of remaining life
- Unsafe or missing handrails on stairs, decks, or balconies
Mechanical & Utility Systems
- Non-functioning heating, plumbing, or electrical systems
- Major leaks (plumbing or roof)
- Inoperable toilets, sinks, showers, or kitchen appliances
Property Condition
- Standing water in yard or basement
- Broken windows or doors
- Evidence of mold, termites, or pest infestation
- Inaccessible attic or crawl space
Access & Safety
- No year-round road access to the property
- Faulty drainage or gutters causing safety hazards
Proactive Steps to Prepare Your Home
Before the appraisal:
- Fix peeling paint – Especially around windows, doors, and exterior surfaces
- Install smoke & CO detectors – In all required locations per local code
- Repair obvious safety hazards – Handrails, broken steps, exposed wiring
- Ensure all utilities work – Heat, water, plumbing, electric must be on and functional
- Fix leaks – Roofs, plumbing, basements
- Address drainage issues – Clear gutters, eliminate standing water
- Provide full access – Attic, crawl spaces, all rooms, and mechanical systems must be accessible
- Complete prior agreed-upon repairs – Any items already negotiated in the contract
What Happens If Repairs Are Required?
If the appraiser identifies required repairs:
- You'll receive a list of "Lender Property Requirements" from the buyer's lender
- You must complete the repairs before closing, or negotiate who will handle them
- The contract may terminate if repairs aren't completed or if parties don't agree on resolution
- A re-inspection may be required to verify repairs were completed properly
Your Options If Repairs Are Required
When the appraiser flags repairs, you have several options:
- Complete the repairs yourself before closing
- Negotiate a credit to the buyer at closing so they can handle repairs after purchase (check with lender—this may not be allowed for certain safety items)
- Negotiate with the buyer about sharing repair costs
- Decline to make repairs and allow the contract to terminate (you can relist the home)
Important: Work closely with your agent to determine the best approach based on your timeline, budget, and market conditions.
Common Seller Questions
Q: What if I already made repairs during the inspection period?
A: Great! Those should satisfy the appraiser's requirements. Make sure documentation and receipts are available.
Q: Can I offer a credit instead of making repairs?
A: Sometimes—but certain safety issues must be physically repaired before closing. Ask your agent and check with the buyer's lender.
Q: What if the appraised value comes in low?
A: FHA and VA buyers have the right to terminate if the appraisal is below the contract price. You can negotiate a price reduction, or the buyer may choose to proceed anyway with a larger down payment.
Q: Do I have to let the appraiser in my attic/crawl space?
A: Yes. The appraiser must have access to all areas of the home, including attic, crawl spaces, and mechanical systems.
Disclaimer: This informational guide is provided by United Real Estate Prestige Denver. It is for educational purposes and does not constitute legal or financial advice. Please consult with your legal and tax counsel regarding your specific transaction.
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