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Inspections Vs Appraisals

INSPECTION PROCESS

As soon as you go under contract and enter your option period you should have a licensed inspector schedule an inspection appointment for the home.  Of course, I can recommend some inspectors who have worked with my previous clients. It is best to let the inspector schedule as soon as they are available. It is not necessary for us to be present during the entire inspection.  In fact, it is recommended that we allow them time to complete a thorough inspection without interruption and then meet them for the last half hour of their appointment to go over the findings. 

Home Inspection

The home inspection will be a general inspection of all components of the home and outbuildings. This inspection may encompass roof, plumbing, electrical, heating, appliances, water heater, furnace, exterior siding, and other visible features of the property.  A detailed report will be written with general information about the home & its systems,  recommendations and pictures, and may include the suggestion to consult a specialist (such as a structural engineer or roofing contractor).  Remember, the home inspector knows a little bit about all the systems in the home, but they are not an expert in any one field so if there is a concern or more info needed we will contact a professional employed in that trade. 

Structural Pest Control Inspection

If you need a termite inspection, you may be able to have this done by your Home Inspector if they are licensed to do this type of inspection as well.  Otherwise, you can use a pest control inspector for a Wood Destroying Insect Inspection.  If you are using a VA loan, a WDI inspection report will be required. Most pest control reports will alert you to conditions which are currently causing damage to the property.  These conditions generally need to be corrected before a lender will make a loan on a home.  They will also outline conditions that are Conducive Conditions to future activity, such as mulch that covers weepholes, shrubs that are touching the home, etc. Some loans require these conditions to be resolved, while others do not.  

 

APPRAISAL PROCESS

Your lender will order an appraisal report on your behalf.  This is required with most loans as a protection to both you and to the lender.  It ensures you are paying market value for the home, and ensures they are not over-lending for this specific property.  You will pay for the appraisal at the time it is ordered, but it is usually not complete for about 2 weeks from the time it is ordered.  

The appraiser will have 2 steps in the process of preparing the report.  They will visually inspect the property, take measurements and look at the features of the home.  This is done in about 45 minutes and agents and buyers are not to attend.  The second step involves them reviewing the recent comparable sales and making value adjustments based on the properties features, size, site location, etc.  It is similar to what I do when discussing a market analysis with sellers, but an appraisal is more in-depth and an appraiser’s licensing and education qualifies them to determine the final market value for a home at the present time. 

When the appraiser has completed their report, it is sent to the lender’s appraisal desk for review and when approved it is sent to the buyer and loan officer/loan processor.  The lender will then update everyone to let us know if the appraisal value met or exceeded our contract price.  If it does, it is then sent on to the underwriter with other loan documents for final approval.