Home Inspections VS. Home Appraisal | Real Estate Tips!

by | Jun 6, 2021 | Real Estate Insight | 0 comments

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In this Video, I will be sharing what does the home inspector look at, when should you get an inspection as a buyer or as a seller, when should you get an appraisal and the common misconception of these home processes!

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Full Transcription Below:

Instances, the seller will get their own appraisal, but it’s

gonna be a lot different versus a purchase.

Andrew, what does the home inspected?

Yes.

So the home Inspector, he kind of goes throughout the whole

house, starts on the outside, checks around all the windows,

garage door opener, looks for dry rot, any kind of signs,

a water leakage and drainage around the house.

They do a very thorough job.

They’re usually there between depending on the size of the

house a couple of hours.

And it’s a little bit scary at times because the seller will

get surprised about some of the things that they find because

they’ve lived there for such a long time.

And they don’t really notice all the little nuances on the

house. They check the roof, the chimney, all the electrical

and the buyer I it’s just a really eye opening experience

for them as well, because it shows them what kind of maintenance

the house are going to need in the next few years.

So not always.

Are the items they find are detrimental, like they need to

be repaired right away.

It’s more finding out the age of the heater, air conditioner,

plumbing and kind of an expected life expectancy of when

those are going to be needing to be replaced.

And not always, but some of the times the buyer will receive

a credit and they’ll get some money to be able to apply towards

those repairs, maybe not to cover all of them, but a portion.

So it kind of depends on the market.

Right.

If it’s a buyers market, sellers, market.

It kind of determines how much they’re willing to give when

in the process.

Should you get an Inspector?

Sometimes the seller will actually get it done before they

put the house in the market.

Kind of avoid those surprises.

They’ll actually schedule it, pay for it themselves.

But typically it is the buyer’s responsibility.

And some buyers will actually get a second opinion and a

second report done.

Kind of cross reference, but Yeah, it kind of varies on how

Proactive the seller wants to be.

That’s interesting to get a second Inspector.

Sometimes it may be a few months have gone by.

So maybe if they got it inspected, Let’s say in July and

they put the house on the market a few months later.

And Let’s say you go in a contract in the wintertime, it

would be a good idea to get a second inspection, to kind

of see it during a different season.

Yeah.

That makes sense when you have as a seller.

If you’re getting your house inspected beforehand, what’s

like the length you typically want to in terms of the turnover

before you put it on the market?

Probably as short as possible.

Really, if you could be within the same month, it’s great.

You just want the weather conditions to be similar, because

if it rains, you want to find out if they’re standing water

under the house, how the drainage looks, any leaking in the

roof or gutters stuff like that.

Okay.

And then as the buyer, when do you typically get an inspection

on the house, usually within the first week.

So when you put an offer on a house, you have a certain amount

of time to be able to complete your inspections.

Typically, there are about 17 days, which is a good amount

of time.

And also it depends on the turnaround time of the Inspector.

Because if they’re booked up and they can get out there for

a week, that already eats up a third of your time.

And in this market that we’re hitting right now, the sellers

want a short of time frame as possible.

So that’s why it’s a good idea if they can actually get it

done ahead of time or at least schedule it that way, we’re

already beating the clock.

Okay.

And Let’s move on to appraisals for appraisals.

Like, when should I get an appraisal as a seller?

Well, the same thing.

In some instances, the seller will get their own appraisal,

but it’s going to be a lot different versus a purchase.

So basically, what an appraisal is a third party opinion

of value.

But when you’re actually buying a home and getting a loan,

the lender is the one that’s going to order the appraisal

until the buyer pays for that.

And they’re basically a third party.

They’re not related to anybody in the contract.

And they do get a copy of the purchase contract.

So their job is to try to support that value.

So they’re going to look at recent sales in the neighborhood

within the last six months and their goal on their objective,

to support whatever purchase price that is.

And in some cases, it’s a little lower.

Some cases, it may be higher.

Okay.

So the appraisal is basically they’re verifying the house,

but it is indeed worth it is what it is.

So as the buyer in terms of getting that appraisal or when

does that happen?

In the processes, it’s typically after it’s part of the contingency.

So it gets ordered, I’d say anywhere between 48 to 72 hours

after the contract is complete, and then it has to be scheduled

with an appraiser.

So it could take anywhere from four to 7 days, then to get

out there.

Once they go out there, measure the house, take pictures,

make sure there’s no health or safety violations.

Usually there’s, like, another two or 3 day turnaround time

to get that.

So like I said in the contract, it’s usually about 17 days

to be able to get that completed.

It okay.

What is the appraiser like?

What are they looking for in the house?

What are they looking at?

Well, they’re comparing it versus other comparables.

What holds the most weight is other sold homes.

The homes in the same neighborhood, similar age, similar

square footage.

That’s what they’re really looking for.

Got it.

Okay.

So there’s current market like we hear people are waving

appraisals waving sections.

Could you speak into that a little bit?

One thing that’s actually different right now is for the

appraisals. They’re doing desktop appraisal, which means

they’re not even going in the home.

And so it kind of speeds up the process, but it is a little

bit more risk because you’re not seeing the inside of the

home. There could be open walls, there could be damaged flooring.

And so they’re they’re really not.

I think part of it is because of the COVID they’re trying

to do a lot less close contact, essentially.

And then for inspections, I’ve heard people are waiving inspections

as well.

Right.

Well, most of the time, like I said, if they already have

all their reports done ahead of time, basically, the buyer

can review those before they even submit their offer.

So that is something that’s happening more and more with

the current market.

That’s really interesting.

What about common misconceptions?

People commonly think the appraisal is the final price of

the home.

Is that true?

Could you talk about that?

Yeah.

In some cases, the appraisal may come in higher than the

purchase price.

So in that case, the price doesn’t change.

It just means that the buyer is actually going to have a

little bit of built in equity.

But in the case that it comes in lower, then the buyer has

a chance to renegotiate the price because the value came

in shorter than what they offered.

And so in some cases, the seller actually asked the buyer

to come in with a difference.

So Let’s say the difference is 10,000 dollars short of appraised

value. They would want the buyer to actually make up the

difference out of pocket.

Yeah.

In cash, in cash, which is right now in the current market,

that’s happening quite a bit.

And also there’s a lot of cash buyers.

So if they’re buying a home cash, there is no appraisal.

It kind of means that they’re willing to buy it, regardless

of what a third party things just worth.

Got it.

Yeah.

That’s interesting for this whole process, like getting your

house appraised, getting a house inspected, I guess certain

parties or companies recommend or have you used different

companies and you kind of figure like this company, but not

this one here.

Like you kind of have weeded them out.

I’m sure inspectors usually there’s a home Inspector and

then a separate pest Inspector.

There’s a handful in town that I use.

And then as far as appraisal, no one has any part in that.

It’s basically called an appraisal management company.

Short for that.

It’s called AMC.

So they control who goes out there and does the appraisal.

It’s like, indeed, independent.

Right.

Yeah.

They’re trying to avoid what happened last time in 2,005

2,006, where the agents were hand picking the appraisers,

and they’re taking them out for lunch and dinner and kind

of making it very apparent that they’re going to get the

value that they’re Wow.

Going after.

I didn’t know that happened.

Didn’t tell five.

Yeah, you’re probably still a middle pool.

So that’s actually really terrible.

I understood the underwriting the loan people were just getting

approved. Like whoever if you had a pulse.

Right.

I didn’t realize the appraisers too, were kind of back then.

They had their hands in the pot as well.

Yeah, it was pretty much a free for.

All right.

Yeah, that’s insane.

A little history right there.

But that’s good.

That now it’s like there’s like measures in place to kind

of separate that to prevent that from happening again.

So anything else on appraisals or inspections you might want

to share?

Well, typically the cost of that is from the buyer.

So the appraisal definitely.

And in some cases, if the inspections haven’t been done and

then the buyer would be paying for those got it.

So they should kind of be prepared for that expense under

anything. But what’s the typical cost for that?

For a pest anywhere around 400 dollars?

Home inspection, about between four to 500 dollars.

It all depends on the size of the home, too.

Then there’s other inspections you can get done.

Pool inspections, chimney inspections.

If it’s on a well and do a well inspection, so I can start

adding up pretty quickly.

Yeah, that’s good.

You said it depends on the the property.

Like what you’re buying for the inspection.

Do they have tiers of inspection that they do?

How do they charge?

They just charge by size of the property.

Well, some companies offer more than one service.

So if you did multiple, if it has one company, if you do

a home and a pass inspection, they give you a free roof inspection.

Yeah, pretty much.

They’re all pretty standard.

Pretty similar price.

Yeah, they have different angles.

So much trying to earn your business.

That’s cool.

Cool.

Alright.

I think that’s it in terms of that.

Thanks for the info.

Appreciate it.