Have you ever had your home appraised? Perhaps you were amazed at how quickly the appraiser went through your home. An appraiser will generally look in each room. They will take a few notes as well as some interior and exterior pictures. Then they will measure your home and any accessory buildings. They will likely ask you some questions regarding any improvements you have made to your property in recent years. That’s usually it.
Have you ever felt like the appraiser should have spent more time inspecting your home? You may be happy to know that hours of research and analysis are spent on your home. You just don’t see it because it happens back at the office.
The appraisal inspection is typically one of the fastest parts of the appraisal process.
Before the appraiser performs the inspection, they have already researched information about your home using various data sources including the local MLS, the county auditor and other data sources.
The goal of the appraisal inspection is to verify that the information about the home being appraised, is accurate. During an appraisal inspection, we are looking for things that relate to value.
The condition of your home is a big one. Is the kitchen and bathrooms updated or remodeled, or are they dated? Are there any major repairs that that would cause a potential buyer to pay less for your home? That would include repairs and conditions that affect the three S’s. Is your home safe, sound and sanitary?
Your homes being safe, and sound is pretty easy to understand. But what about its being sanitary? What does that mean? The term sanitary refers to conditions that effect health. If there is animal urine or feces on the floors, mildew growing on the walls, or areas of a home that have not been cleaned in years, this is going to negatively affect market value. Your home doesn’t have to be perfect.
Most people’s homes are already sanitary and clean. I am referring to extreme situations.
Appraisers will also want to have an accurate idea of the gross living area and other salient features that play a role in market value.
Some inspections may take as little as twenty minutes. Other inspections may take hours. Many of my inspections take about thirty to forty-five minutes. However, if I am appraising a large home with many complexities, including difficult exterior measurements, and numerous exterior amenities like in-ground pools, carriage houses, out buildings and the like, it may take me much longer.
During the inspection, appraisers are looking for things that are readily observable. That means things that are fairly easy to see as we walk through a home. That would include repairs. For more information on appraisal inspections, check out my article, “Our Judgements Are Based On What We Observe”. (Here is a link)
FHA APPRAISAL INSPECTIONS
For FHA inspections, appraisers have several additional steps to take, including a head and shoulders view of attics and crawl spaces. We also must ensure that at least one window (or exterior door) in every bedroom is operable.
FHA inspections require appraisers to turn on the hot water faucets to make sure that the water heater is operating properly. Appraisers will also turn on the HVAC systems to ensure that they are working. Additionally, we will test a representative number of electrical outlets to make sure that they are operable. In appraisal inspections for Conventional loans, these things additional steps are typically not necessary.
If you would like more information on common FHA violations, please read my article, “Common FHA Violations”. (Here is a link)
What about a home inspection? To find out, I thought I would interview a local, well respected home inspector in my area. Tom Mountjoy. He is a state licensed home inspector, located in Wadsworth, Ohio.
Over the years, I have referred numerous people to Tom for their home inspections. He does a great job!
Here is my interview with Tom (You can listen to my live interview with Tom on my Podcast):
Jamie – Thanks for taking the time to answer a few questions about home inspections Tom! Is there anything that a homeowner needs to do in preparation for the inspection?
Tom – There are helpful things that make an inspection go smoothly. These would include making sure all public utilities are turned on such as gas, electric and water. Additionally, having access available to all attic entrances by removing clothes and stored items from closets containing attic hatches and removing any items in garages such as vehicles that might be in the way of drop down stairs and/or removing anything that would prohibit a ladder from being setup. Generally speaking, the homeowner should insure that the home inspector can move around the home safely.
The homeowner should remove or secure any valuables and fragile items. For example, it’s a bummer when a shelf full of fine crystal is on shelving in front of an electrical service panel.
Jamie – Does it matter if the home buyer is with you during the inspection?
Tom – This depends on the circumstances under which the inspection is being performed. There are pre-sale inspections that are done for a person who is preparing to sell their property. In this case the seller might wish to be aware of issues in the home that would require attention prior to a real estate transaction occurring. However, the most common inspection is done for a person who has made an agreement with a seller to purchase a property contingent upon the findings of an inspection. In both cases the person paying for the inspection is considered to be the client.
In the first instance when the client is the property/homeowner I would consider their presence optional as they are most likely familiar with the home to a comfortable degree.
In the latter case when the client is a buyer, I prefer to have the client at the inspection if at all possible for the duration of the inspection or at least near the end of the inspection. This allows me to point things out to the buyer/client and have a dialogue with them that may clarify items in the report. There are some inspectors who prefer to perform the inspection without any client presence and they only wish to meet with the client at the end of the inspection to review issues at that time. I would recommend speaking with the inspector regarding their preference on client presence prior to hiring.
Also, If I am working for a buyer, I prefer the seller/homeowner not be present. There should be freedom to discuss the property with the buyer without concerns of being overheard or interrupted by the owner. There are occasions where an exception is made.
Jamie – What kind of things do you look for during the inspection?
Tom – The list is actually quite extensive. The inspection is done according to a Standards of Practice (SOP). The SOP is defined by the state and/or professional organizations. The condensed answer would be an inspection is a non-invasive visual inspection of a property, its structure, systems and their components from the roof to its foundation. The systems would include the HVAC system, Plumbing, Electrical, Roof, Siding etc. These systems are examined for proper installation, function and safety.The inspector should be able to provide you with a copy of the SOP under which they operate.
Jamie – How do you inspect roofs, crawl spaces and attics?
Tom – An inspector is not required to walk a roof or enter a crawl space or attic area deemed “unsafe” by that inspector. Most inspectors will walk a roof if possible based on its height, pitch and weather conditions. It is also valid to inspect from the eaves (typically using a ladder) or from the ground using binoculars.
Crawl spaces, if free of dangerous debris, water etc., may be entered if it has adequate access and the inspector feels he/she can do so safely.
Similarly, attics can present challenges. Once again, if safe, an attic may be entered and traversed. Judgment is made at the time of inspection based on the presence of insulation, exposed wires, head room, etc. If possible, most inspectors will enter the attic in order to have the best view of the roof sheathing, truss work, rafters, etc. Typically SOPs only require observation from the access point.
Jamie – Do you check every electrical outlet?
Tom – SOPs generally require testing of a “representative” number of electrical receptacles. Inspectors will most often check all receptacles that are accessible but will not move furniture or valuables to do so.
Jamie – Do you have to open every window?
Tom – Similarly to electrical receptacles, windows are opened and inspected based on accessibility.
Jamie – What happens if you find a problem or suspect a problem with the home?
Tom – If there is a safety issue that has the immediate potential of causing harm to either the current property owner or the buyer, for example a fire hazard, inspectors will notify the parties involved. Otherwise a written report with descriptions of findings and most often multiple photos will be supplied to the client. This report is usually reviewed by the client and their Realtor (if one is involved in the transaction) and based on the findings, the client will make decisions from there. The inspector should also be willing to discuss the report in order to answer any outstanding questions.
Jamie – How long does a typical home inspection take?
Tom – The time duration of an inspection depends on the size and condition of the property. I typically ask for a 3-hour window. If there are minimal issues and attic access is not hindered the actual time required might be closer to 2 to 2 1/2 hours.
Jamie – Does the inspector have any work to do after the inspection is completed?
Tom – There is always paperwork to be done after the inspection. Some inspectors use software and have the capability to provide a report immediately following the inspection. A more likely scenario would be for the inspector to return to the office and generate the report after reviewing notes and pictures. I do my best to provide the report within 24 hours of the inspection’s ending time. The client should ask the inspector how and when their report will be submitted prior to the hire.
Jamie – Is there anything else you would like to share?
Tom – Ohio inspectors will soon be required to be licensed. This was previously not the case. Clients should verify that inspectors they consider are licensed by the state at the very minimum. It is also important to remember that holding a license does not make all inspectors equal.
I would recommend that beyond being licensed, an inspector is also certified through a professional organization such as ASHI (American Society of Home Inspectors) and/or InterNACHI (International Association of Certified Home Inspectors). This type of membership insures on-going continuing education and professional development in addition to the licensing requirements.
The inspector-client relationship is relatively short, but very important. I would highly recommend hiring an inspector that you believe understands you and your concerns. Check online reviews to see what previous clients are saying and do not make a decision based on price. There is most likely a reason “that an inspector’s price” is significantly lower than all the others.
Jamie – Thanks so much for taking the time to share this great information Tom! If you are located in Northeast Ohio and are looking for a great home inspector, give Tom a call. His company is Footer To Ridge Property Inspections, LLC. (Click here to go to his website)
There is a lot that goes on in a home inspection. While home inspections and appraisal inspections have some similarities, clearly a home inspection is much more extensive.
Often, appraisers will make it clear in our reports that our inspection is not to be relied upon as a home inspection. The home inspection and the appraisal inspection have different goals to achieve. If you’re purchasing a home, I highly recommend hiring a home inspector.
I hope you found this information to be helpful! If you’re looking for an appraiser in Northeast Ohio, give me a call! I would love to help you.
If you’re not in Northeast Ohio, check out www.FindMyAppraiser.com to find a qualified real estate appraiser in your area. I am a proud member of the FindMyAppraiser network.
As always, thank you for reading my article! Have a great day!
Something New! The Cleveland Appraisal Blog – PODCAST
If you enjoy the content of my articles and enjoy podcasts, check out my new podcast.
You can listen directly from my blog here. Or you can hear my podcast on Anchor or Spotify by clicking here. I’m working on being broadcast on more platforms in the near future!
Here are some links to other articles and videos I enjoyed recently! I hope you will also…
French Fry Situational Awareness In Your Home – Housing Notes by Jonathan Miller
The Brady Bunch House Renovation And Thoughts On Value – Birmingham Appraisal Blog
Peaking prices & rosy real estate narratives – Sacramento Appraisal Blog
Are There Three Types of Client’s? – George Dell’s Analogue Blog
Newz;FRT Issues – Why Suburbs Look the Same!- APPRAISAL TODAY
What’s In Your Workfile? – Tim Andersen Is The Appraiser’s Advocate Podcast
What’s the Worst That Could Happen? – Real Value Podcast
The Cost of Agents Inaccurately Reporting Square Footage? – The Appraiser Coach Podcast
3 thoughts on “Differences Between A Home Inspection and An Appraisal Inspection”
Nice job Jamie. I find some buyers forgo a home inspection because they’re getting an appraisal “inspection”. It’s a huge mistake to equate these inspections as the same thing and it can end very badly for the buyer here. I get someone wanting to save a matter of hundreds of dollars, but a home inspection is money well spent. I would also advocate for a pest inspection. An added bonus is you might be able to negotiate repairs or the contract price based on the findings of these extra reports. I know when we bought our last house we had an offer in on a different house first and the home inspector found all sorts of things wrong. I’m so glad that deal fell apart.
Thanks Ryan! Great points! It’s so true. A home inspection is definitely money well spent. I love your point about the results possibly being used as a negotiating tool if problems are found during the inspection. I had never thought about a pest inspection. That sounds like sage advise as well. Thanks, as always, for commenting! You always make great points. I always look forward to hearing from you my friend!