November 18, 2010
FHA appraisals, which are not the same as independent home inspections, are conducted for three reasons. According to the FHA, appraisals are conducted, “To estimate the market value of the property…to make sure that the property meets FHA minimum property requirements…(and) to make sure that the property is marketable.”
FHA borrowers should pay for an independent inspection of the home for two important reasons–the first being that FHA appraisals will only catch problems that are “readily observable” by the appraiser. A qualified home inspector will look much closer at the home to find problem areas or cause for concern.
The second reason is that even when the FHA appraiser notes nothing out of the ordinary, the FHA does not guarantee the value or condition of the home. What’s more, FHA guidelines state no assistance is available should a problem be discovered once the home has been purchased with a government home loan. The FHA won’t buy the house back, and it won’t be able to provide funds to fix the issue.
It’s not enough for an FHA loan applicant to pay the fee to have an independent home inspection done; the real work comes before the inspection. A smart buyer will make a written offer on a home that includes a clause stating the offer is contingent on a home inspection carried out by a qualified inspector. Anything less than this makes the buyer vulnerable. Don’t agree to make an offer on a home without an inspection. Even if you do have the property examined, you may find yourself trapped in a deal you’re not entirely comfortable making unless you protect yourself in the written offer.
When you approach a home inspector, make sure you hire someone willing to let attend the inspection. Seeing your home through the eyes of an experienced professional will teach you plenty of things about how to evaluate a home. You can find a qualified inspector through your real estate agent, local professional associations, or at state regulatory agency websites.
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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