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Appraisal versus Home Inspection Appraisal vs Home Inspection home inspectorsThis is one question a person could ask a hundred each - home inspectors, real estate agents and lawyers and my guess is actually get 300 hundred people to agree on one thing.... home inspections and appraisals are very different things.In a nut shell a home inspection is a visual inspection of the readily accessible components of the home usually performed for a home buyer in order to provide the home buyer with information about the condition of the home. Home inspections should provide the buyer with information about conditions within the home that are not functioning as intended or are unsafe. Many inspectors will take this a step further and advise home buyers as to the remaining statistical useful life of components. Home inspectors (should be) educated in the class room and in the field on how the components of the home function and more specifically how they function together. Home inspectors need to have detailed knowledge about the structure, roofing, electric, heating, plumbing, exterior, grounds and the like in order to be able to provide you with useful information about the home. As a rule home inspectors do not comment about the value of a dwelling because it is outside their expertise. Home inspectors do not receive any training at all on how to value a home or how to determine the price of a home. Home appraisers (should be) educated in determining the value of one dwelling as it compares to other dwellings in the same area. Appraisers measure the dwelling, review the survey and conduct a brief physical inspection to determine if there are blatant major issues that can lower or raise the value of the dwelling compared to others in the same area. When an appraiser assigns a value to a home that value is relative to other homes in the same area with similar features. Since two identical homes seldom exist in the same area with one selling a few weeks before the other appraisers must make adjustments to the value (up and down) for various factors. A home with a two car garage is typically worth more than a home with a one car garage for instance. Homes with larger lots typically sell for more than homes with smaller lots. Homes on busy streets are less valuable than those on quite dead ends. For some time appraisers who failed to value a home high enough to satisfy the requirements of the mortgage company were rewarded for their honesty by not getting future work from that mortgage company. There have been some changes to stop that practice that seem to be effective. In fact I believe those changes are as responsible for the drop in property values as the general decline in the economy. One thing I think is unfair is appraisers review the sales contract as part of determining the value. I would think an appraisal should be a fair value assessment without the appraiser having a critical part of information. Think of it this way. A fair sale is a sale from a willing seller to a willing buyer where neither party is under duress. I think it would be more fair for an appraiser to come up with his or her own valve for a property without knowing the actual sale price and terms.
Appraisal versus Home Inspection Appraisal vs Home Inspection |
