House inspectors and home appraisers look at some of the same things, but the two professionals have distinctly different purposes. Buyers and sellers voluntarily hire inspectors to examine a property to look for damage and make suggestions for repairs in a formal report. Lenders require a formal appraisal to determine the current value of the house under consideration for a mortgage. Buyers typically use inspection reports to determine home condition; lenders use appraisals as reasons to approve or deny home mortgages.
Property inspectors make detailed investigation of the home without making any assessment of the worth of the property. Sellers occasionally hire inspectors to complete a preliminary report to identify problems to prepare the house for the sale market. Buyers pay inspectors to examine the home for potential problems, and typically ask permission to conduct a property inspection as a provision of the sale contract. Lenders making loans in geographic areas with termites, including southern California and Arizona, generally require the borrower to supply a termite report from a pest control company showing the home is free from insect infestations.
The property inspection focuses on the condition of the structure, including the age and condition. Inspectors estimate the useful life left in the home mechanicals, including the heating and cooling systems, and the roof. Specialty home inspectors focus on one area, such as roofs, insulation and energy use and closely inspect this feature. Inspectors provide detailed written reports to the seller or the home buyer. Some inspectors tour the home with the homeowner or buyer after the inspection and point out problems listed in the written report. This allows time for questions and discussion about possible ways to repair or replace items listed as damaged or inoperable on the inspection report.
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Appraisers work as independent agents licensed by the state to assess the value of a piece of property. Lenders and some potential homeowners hire appraisers to ensure the price to be paid for the home matches with other homes having similar features that have recently sold in the neighborhood. Appraisers completing reports for loans backed with federal funds, including Fannie and Freddie Mac, or loans taken under the Veterans Administration or Department of Agricultural Rural Development, must complete detailed, standardized reports supplied by these agencies.
Appraisers determine a value for the property by looking at the structure, land parcel and comparable home sales in the same neighborhood or general geographic region. The appraiser considers the age of the house, roof, mechanicals and the type of foundation, such as slab or basement. Inspectors factor in the home features and give more value to homes with swimming pools, high-quality bathrooms with tiled showers and jetted bathtubs. Kitchens with high-end appliances and granite counter tops also may appraise at higher prices compared with kitchens with basic features and laminate counter tops. Some appraisers use a standardized value list for home features, while others make a holistic judgment based on their professional experience.
- Realtor.com: What Does an Appraiser Do?
- American Society of Home Inspectors: Frequently Asked Questions on Home Inspections
- American Home Inspectors Directory: Home Inspection Checklist
- Arizona Office of Pest Management: Termite Inspections
- U.S. Bureau of Labor Statistics: Appraisers and Assessors of Real Estate -- What Appraisers and Assessors of Real Estate Do
- New York Times: Scrutiny for Home Appraisers as the Market Struggles
- Iowa Professional Licensing Bureau: Real Estate Appraisers
- U.S. Department of Housing and Urban Development: Buying a Home
- U.S. Department of Agricultural Rural Development: Property Eligibility
- U.S. Department of Housing and Urban Development: Fees and Forms -- Appraisal and Inspection
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