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  CASE STUDY: When the Appraisal Triggers Repairs – and How to Navigate It Like a

  Posted by Nadlan Group on May 15 at 21:42

  🔍 CASE STUDY: When the Appraisal Triggers Repairs – and How to Navigate It Like a Pro

  Loan Number: 1352
  Borrower: Shlomi M.
  Property Type: Single Family Home – Tennessee
  Loan Purpose: Refinance with Cashout
  Loan Type: DSCR Loan (Debt-Service Coverage Ratio)
  Challenge: Appraisal came back Subject To critical repairs
  Resolution: Coordinated repairs, provided photos and invoices for lender reinspection

  🛠️ When the Appraisal Comes Back “Subject To” – What It Means

  In DSCR loans, the lender orders an independent appraisal to ensure the property meets both value and livability standards. In this case, the appraiser flagged critical repairs necessary before moving forward with approval:

  • Replace cover for thermostat

  • Repair HVAC system (reinstall ductwork by a licensed tech)

  • Replace overflow pipe on TPC valve

  • Ensure gas hot water tank drains properly outside

  These weren’t cosmetic issues — they affected habitability and thus lender risk.

  💡 The Borrower’s Initial Reaction

  At first, Shlomi was confused. The property was newly rehabbed, and the appraisal number ($110,000) came in below market expectations. He questioned:

  “Why is this called an inspection and not an appraisal?”
  “Why would I fix things before I have a tenant?”

  Despite the frustration, Shlomi moved forward with a clear plan: wait for the lease, then complete the repairs.

  🧾 How to Verify Repairs for the Lender

  Once the borrower completes the repairs, most lenders require reinspection, but only after proper documentation:

  ✅ Photos of completed work
  ✅ Invoices from licensed contractors

  In this case, Shlomi provided photos first. But the underwriter requested invoices to verify that the work was performed by qualified professionals and that repairs matched the appraiser’s requirements.

  ⚙️ Timeline Breakdown

  • 3/14 – Appraisal delivered “subject to” repairs

  • 3/24–4/8 – Borrower secures quotes; power and gas turned on for HVAC testing

  • 5/13 – Repairs completed, photos sent

  • 5/14 – Underwriter requests matching invoices

  • Pending – Invoices to be submitted for reinspection and final approval

  🧠 Lessons for Foreign Investors

  1. Appraisals Are More Than Value – They reflect livability.

  2. Photos Are Not Enough – Always collect repair invoices.

  3. Don’t Delay Repairs – Tenants shouldn’t move in before work is done.

  4. Stay Proactive – Delays in repairs can lead to appraisal expiration and deal collapse.

  5. Communicate Openly – Updates between borrower, broker, and lender are key to keeping the loan alive.

  🎯 Final Thought

  While frustrating, this case is a perfect example of how foreign nationals working with DSCR lenders must be prepared for “Subject To” appraisals. With the right documentation and teamwork, these loans can still close smoothly – even when the path gets bumpy.

  Need help with your DSCR loan?
  Let us help you get the best rate through an auction between 3,000+ lenders.
  👉 Contact Nadlan Capital Group

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  Nadlan Group replied 1 month ago 1 Member · 0 Replies

  • Appraisal
  • Case Study
  • Repairs
  • Timeline
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