September 15, 2011
The FHA requires an appraisal for any property to be financed with an FHA insured mortgage. The appraisal insures the home meets FHA standards and establishes a fair market value for the home.
But an appraisal is not considered an inspection, and just because the home passes the appraisal process with little or no recommendations for repairs or improvements does not mean the house is free from defects.
FHA encourages borrowers to hire a home inspector to examine the home prior to purchase. Borrowers should consider putting a clause in their purchase agreements that make final commitment to the loan contingent on the results of a home inspection. The borrower is responsible for paying for the inspection, and choosing one is just as important as having the work done.
Some assume the FHA or HUD has a list of “approved” home inspectors, but according to the FHA official site, this is not true. “Although HUD encourages home buyers to obtain a home inspection from a reputable home inspector or inspection company, HUD does not maintain a list of home inspectors. Home buyers should talk to their real estate agent or other real estate professional for information about local home inspectors. An appraisal is NOT a home inspection.”
When choosing an inspector, it’s important to make sure the work and the inspection report meets all state and/or local requirements. If you have areas you’re particularly concerned with such as termites, foundation problems, lead paint, asbestos, etc. be sure to specify up front what you’re concerned with. Never assume the inspector knows what you want or have worries about when it comes to the home.
A good home inspector will have references, a resume, and other qualifying documentation. New inspectors are not necessarily less qualified or competent, and in some cases an inspector eager to establish a good track record may go the extra mile for you when reviewing the property. Newcomers to the profession often have partners or colleagues who can assist them in areas they may have questions on.
It’s always good to ask an inspector what experience they have specifically in residential inspections–a lack of experience overall may not hinder an inspector’s work, but someone who spends more time reviewing non-residential properties may need additional help from you when it comes to looking into areas of possible concern. Some prefer to choose only inspectors with a majority of their experience (or at least a great deal of it) doing residential work.
Home inspections are an important part of the home buying process. It’s never safe to purchase a property on good faith–get a trained eye to look over your potential new home before making the commitment.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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