What problems or defects will fail a conventional loan appraisal?

A conventional loan appraisal is not a pass-fail inspection: the appraiser's job is to estimate market value, and visible defects matter only as they affect that value. A loan can still be denied or restructured when the appraised value comes in below the purchase price, because the lender uses the appraisal to determine the interest rate, required down payment, and whether the loan is approved.