Tom Horn is an experienced appraiser & a wealth of information on real estate.
In the article below he goes into detail about the Difference Between an FHA Appraisal & A Home Inspection. (Thanks Tom for sharing so freely, we really like all the great info.)
By Tom Horn (re-published by permission)
FHA appraisal is not a home inspection
I received an interesting question from a reader recently that I thought I would share with you today. This particular situation involved an FHA appraisal and the condition of the property. The buyer did not want to spend money on a home inspection and wanted to know if the appraisal would include the same information. The short answer is that an FHA appraisal is not a home inspection, but today I will attempt to explain in more detail how this all works. If you have further questions feel free to leave a comment below.
Don’t confuse the appraisal with the home inspection The down and dirty difference between an appraisal and a home inspection are that the appraisal is mainly concerned with the value of the home and the home inspection is concerned with the condition of the home. While an FHA appraisal does include some information about the condition of the mechanical and structural systems of the house it is generally not considered as comprehensive as the home inspection because it is limited to what is readily observable.
The policy of FHA/HUD is to encourage buyers to obtain a home inspection because it is much more thorough than an appraisal. Because the appraisal is more concerned with the value of the property it may not detect all of the problems a property may have.
The appraisal is not meant to detect all of the problems that a home may have. It is not a guarantee that a property is free from defects. The appraisal report is meant for the lender and not buyer or borrower.
The FHA/HUD handbook that the appraiser uses outlines the appraiser’s role as the following:
“One who observes, analyzes, and reports the physical and economic characteristics of a property and provides an opinion of value to FHA. An Appraiser’s observation is limited to readily observable conditions and is not as comprehensive an inspection as one performed by a licensed home inspector.”
The main purpose of the FHA appraisal is to determine the fair market value of the house and to make sure that it meets HUD’s Minimum Property Requirement’s (MPR’s). These MPR’s are mainly concerned with whether the property is safe, sound, and secure but they do not include many of the items that a home inspector would look for.
FHA/HUD recommends a home inspection An appraisal was never meant to give a comprehensive and detailed analysis of all of the systems of the house. Because of this HUD/FHA provides information to educate the buyer/borrower about the differences between the two. The “For Your Protection, Get A Home Inspection” is provided to home buyers by lenders during the initial stages of getting a loan.
During the appraisal observation, there are items that the appraiser can and will comment on based on what they are and what level of expertise is needed to determine the necessary course of action. Conditions that require an inspection by a qualified professional include the following:
Do you have any additional questions about FHA appraisals and home inspections? Ask Tom Horn go here : http://birminghamappraisalblog.com/contact-tom-horn/
8 Tips For Preparing For A Montana Home Inspection.
Home Sellers should be aware that a buyer's home inspection can easily become a whole new round of negotiations, especially if the house was not pre-inspected before it hit the market.
No one likes being surprised by serious defects.
The buyer may ask you to fix a long list of problems that are discovered, provide them with a credit or price discount in order to deal with the issues, or in a worse case they may just walk away the deal altogether.
Having a Pre-listing Home Inspection is the best way to prevent this.
It can be very discouraging to lose your first interested buyers because you were blind-sided by the number of things they wanted you to fix .
All this hassle can be avoided by getting a Seller's Pre-listing Inspection.
A Seller's Inspection will greatly reduce the chances of running into surprise defects and will give you time to budget for repairs & talk with contractors. You may even be able to use the inspection report as your disclosure & speed things along.
It is far more difficult for a buyer to try to renegotiate after their home inspection if the defect has already been documented and presented to them up front & prior to their offer.
Home preparation is one of the keys to selling Real Estate in a timely manner, getting your home ready for the inspection creates a cleaner looking inspection report & opens up possibilities quicker financing & a faster sale.
The better shape your house is in the easier it will be for buyers to get financing & the faster your house will sell.
Having an overview of the guidelines used by organizations like VA, FHA & Rural Development can help you prepare your house for the market. WE CAN PROVIDE YOU WITH THOSE, Just Look For The Free Downloads.
HOW TO GET READY FOR THE INSPECTOR
Before the Inspection a seller can prepare by eliminating any defects that they are already aware of. By eliminating small problems ahead of time you will get a much cleaner report & your house is likely to sell much faster.
Get Our Comprehensive Fix It Check List For Seller Preparation
If you are a buyer you can ask your Realtor to provide this check list to the seller a week before the inspection.
Get The PDF Of This List
These are easy and simple things that can be done to prepare for a home inspection :
** To get a comprehensive List of Common Defects you might want to fix in advance see the PDF Library.
Get The PDF Of This List
Copyright 2016 -Bob Ruby, Dianne Keast, Home Inspection Solutions Missoula MT, 59808
TIPS FOR PREPARING TO SELL YOUR HOUSE (Get Checklist )
One Fact that home sellers should be aware of is that the buyer's home inspection can easily become a second round of negotiations, especially if the house was not pre-inspected before it hit the market.
The buyer may ask you to fix a big list of problems that were documented by their inspector, they may ask you to give them a price reduction or a worse case scenario they may just walk away from the deal .
It can be very discouraging to lose the first interested buyers because you were blind-sided by the number of things they asked you to fix & if you do not have the money to fix them before closing you may loose the deal. Having a Pre-listing Home Inspection is the best way to prevent these problems.
All this hassle can be avoided by getting a Seller's Pre-listing Inspection.
A Seller's Inspection will greatly reduce the chances of running into surprise defects and will give you time to budget for repairs & talk to contractors. You may even be able to use the inspection report as your disclosure & speed things along. It is far more difficult for a buyer to renegotiate after a buyer’s home inspection if the defects have already been disclosed to them in a pre-listing report before they made an offer.
Home preparation is an important part of selling Real Estate in a timely manner, getting your home ready for the inspection helps this process along .
Also, NAR reports that REALTORS® recommend buyers get a home inspection nearly 99% of the time.”
There is no guarantee how an inspection will affect a home sale, but when combined with online report viewing and our open house kit a Seller's Inspection report can support the timely sale of your property.
If there are no "Major" defects found, your home will get a "Move-In Certified" yard sign, indicating it is ready for all financing and can be occupied with no improvements required before closing.
Visit our Sellers Page for more info.
LEARN HOW TO PREPARE FOR YOUR HOME INSPECTION:
You can prepare for any home inspection by first eliminating defects that you know about, this will result in a cleaner inspection report which notes fewer defects.
On inspection day you should make it easier for the home inspector to do his/her job. This will make for a more accurate inspection report.
Download our Checklist of easy and simple things you can do to prepare for a home inspection.
Home Inspection Solutions Missoula MT
Bob Ruby - Dianne Keast
Bob Ruby - Home Inspection Solutions Missoula MT. 406-646-6182 , firstname.lastname@example.org
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