I find myself explaining this on a regular basis. It makes complete sense to me why someone would ask. Nobody wants to spend more money than they need to or pay twice for the same thing. So, I’ll explain why you need an appraiser and an inspector no matter what kind of loan you are getting.
Let’s start with the definition of each. An appraiser is hired, usually by the lender on the borrower’s behalf, to compare the property to other properties in the immediate area that have sold. The goal is for them to determine their opinion of the market value on that day at that time. The lender wants to know that if they have to foreclose, the property is worth what is owed. Some types of loans such as FHA require the appraiser to note certain ‘defects’ to the property.
A home inspector is hired by the buyer and owes no duty to anyone but the buyer. The inspector has a checklist of systems and features of a home that he/she inspects. Most states regulate the lists and the inspectors. The inspector is required to be knowledgeable about all of the systems in a home and report to the buyer any deficiencies. ‘Deficiencies’ is a little vague and can mean something different from state to state. In Texas, a deficiency can be something that works perfectly and is safe but doesn’t meet the current code for new products and installation. It can also mean, “this stuff doesn’t work at all and/or is a huge safety hazard”. A good inspector will have this discussion with you so you know what is what.
In my humble opinion supported by over 17 years of real estate experience, you need both in almost every situation. You need the appraisal because you don’t want to pay too much for the property unknowingly. If you know the market value but believe it’s worth more to you and you’re willing to pay more (cash), then go ahead. Just do it ‘knowingly’. Of course, if there is a loan involved, it must appraise for the loan value or more.
The inspection is important so you know what you’re buying. I’ve seen homes that looked fabulous with no cracks or dragging doors but in need of over $10,000 in foundation repairs. On the flip, I’ve seen cracks and broken brick that only needed better drainage and no foundation repair. What if you buy the house and later discover that the rafters are failing and you need a new roof structure? If you have an inspection, that shouldn’t happen to you. The cost of an inspection is far less than unexpected major repairs.
I hope this has helped. Don’t forget to call me if you have questions or need a REALTOR!
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