Appraisal or Home Inspection?

People sometimes confuse a home inspection and an appraisal when they are in the process of buying a home.

Most mortgage applications involve an appraisal, which can be a physical inspection of the property plus a written analysis of similar homes that have recently sold in the area. An appraisal can also be what is known as a "valuation" and can be the result of pulling data from a database that compares home sales in the area, tax records and other information that will give the lender a range of value.

Since the true value of a home is what a willing buyer and a seller who is not in distress will agree on, the lender is typically just looking for verification that the sales prices can be supported by neighborhood data and the loan risk is minimized.

A Home Inspection, however, can be done at any time, but is especially helpful at the time of purchase to discover defects. The mechanical systems of the home (heating, plumbing, electrical, roof, etc.) are reviewed to see if they merit further investigation. Each area of the home is checked against standard forms and guidelines to see what problems might need correction.

Home Inspectors can be a trained professional, licensed to perform true, in-depth inspections, or they can be the assistant to someone who went to class and got "certified" and bought an ad in the phone book. Get several recommendations or work with a name brand service so you have somewhere to go with a complaint.

There is the chance that your realtor or your lender will advise you not to bother. Why? Because when you see the 25+ page form filled with notes about a cracked sidewalk or a 10 year old heat exchanger or a broken window with some moisture nearby, you might kill the deal. First time homebuyers are especially nervous about everything and will use any excuse to act on their buyer's remorse.

FHA, however, recommends a Home Inspection on every purchase and you have to sign a form stating that someone told you that. Their reasoning is that the Appraiser will never catch everything that's wrong with a house and they don't want the liability or hassle from you later.

What should you do? Get the inspection. Have a trusted family friend or parent who understands your temperment and who has owned a home go over it with you. Let them tell you which items will cause you real grief and which things are just minor annoyances.

The realtor and the lender both have commissions or fees riding on your deal. There may even be deals stacked around this one as the seller buys a house and that seller buys another house, etc. You need someone who knows you and is not easily frightened to look over the report and tell you the truth.

Judi Moore authors Ask The Underwriter at 2rHouse.org and personally answers questions from readers about FHA mortgages and mortgage advice in general.

---

Real Estate Growth: How Long Will It Last?

There has been speculation in the media recently about the... Read More

Property Investing - Am I Buying for Profit or Prestige?

All of us have emotional preconceptions and assumptions. They are... Read More

Residential Income Property Financing: Part 2 of 3

Welcome to the second segment of a three-part series about... Read More

Yes But, How Do I Evaluate Buying Undeveloped Land And Get Into The Business?

These real questions on buying undeveloped land are answered by... Read More

How Can the Average Person Build Wealth in Real Estate?

Books on real estate are a dime a dozen-and most... Read More

Selling Your Property Without An Estate Agent

It is possible to save £1,000s selling your home privately... Read More

Selling Your House - $100,000 Pets

Is your pet worth $100,000? It may be if you... Read More

Real Estate Value: Knowing yours is Key to Mortgage Success

The value of the real estate you own, whether it... Read More

Odors Can Make or Break The Sale of Your Home

It's amazing how important the sense of smell is to... Read More

Miami Property Booming for Foreign Investors

Miami tourism is growing and so is the Miami property... Read More

Budgeting Your Log Home: Where Do You Start?

The Log home industry has matured these last many years,... Read More

Choosing Your REALTOR ®

With so many realtors competing for your business, how do... Read More

Sell Your Income Property For More

Selling income property isn't like selling a house. You can... Read More

Selling Your Home ? Be Sure It Shows Well

Whether you are selling a house, townhouse, condo or apartment,... Read More

Understanding the Escrow (Closing) Process

1. What is an escrow?Escrow is defined as a process... Read More

Inspecting Your New Home - 17 Areas You Must Inspect Before Taking Possession

Congratulations! You've made your decision; you've chosen your new home... Read More

How to Sell Your House For Full Price

Many people believe that a real estate broker is needed... Read More

What You Can Do To Sell Your Home Fast

Yes, you want to sell your home and you want... Read More

Sell Houses Fast & Top Dollar: Design Psychology

How would you like to start a bidding war for... Read More

Investing in Real Estate for Your Retirement (and Now!)

You've probably heard a lot of opposing information about Investing... Read More

Types Of Real Estate - An Investors Choice

There are different types of real estate, and different ways... Read More

Real Estate Investing In Belize

Any trip to Belize starts fantasies of owning a beach... Read More

Sell Your Home Without Paying Any Commissions

All of us know that real estate commissions can work... Read More

Selling Investment Houses: Psychology of Mirrors

Discover new interior Design Psychology strategies to increase your real... Read More

Home Inspections or Home Warranty?

Homebuyers are a curious lot. They routinely ask thought-provoking questions.... Read More

Things To Consider Before Buying a Condo Hotel or Resort Residence

Resort home ownership, such as condo hotels and fractional shares... Read More

Do I Need A Real Estate Survey?

Getting a survey before you close on any real estate... Read More

Real Estate Investing - Free Vacations While Searching for Real Estate Acquisitions

Real estate investing professionals look for all possible tax deductions... Read More

Whats This about a Housing Bubble?

In his recent testimony, Alan Greenspan warned against the possiblity... Read More

Use Targeted Decorating To Get A Higher Price For Your House

This article will show you how to sell your home... Read More

5 Factors of Selling a Home

There are five major factors to consider when selling a... Read More

The 5 Biggest Mistakes Made When Getting A Business Appraised

Most business owners will, at some point, want or need... Read More

A Few Easy Ways To Take The Headache Out Of Moving

Moving from one house to another is always a challenge,... Read More