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Why can’t a home buyer put their trust in the appraisal alone? Why should you budget and pay for the optional home inspection? Inspections are only as optional as taking a used car for a test drive before agreeing to buy it.

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FHA Appraisals: What Could Be Wrong With the Home You Want to Buy?

June 4, 2022

FHA Appraisals: What Could Be Wrong With the Home You Want to Buy?
When you start researching your home loan options, you quickly learn about the advice about appraisals and home inspections. The FHA and HUD publish a document on this topic called “For Your Protection, Get A Home Inspection” and the advice is never to trust the appraisal to stand in for a proper home inspection.

Why can’t a home buyer put their trust in the appraisal alone? Why should you budget and pay for the “optional” home inspection? Inspections are only as optional as taking a used car for a test drive before agreeing to buy it. You certainly could buy the car without the test drive, but who would?

Appraisal vs. Inspection: The Foundation

Your FHA appraiser is not required to be an expert in all areas of the home and that includes the foundation. While it’s true that there may be foundation problems you can spot at a glance, other issues may not be apparent in the appraisal process. They may only be revealed during a home inspection depending on the problem. 

The appraiser is required to visually inspect the basement, crawl space, and other areas to look for leaks, excess moisture, and visible problems. Will the appraiser enter the crawl space? They may not be required to. If your appraiser isn’t an expert in certain areas of the home, will you be willing to trust the results of the appraisal if there are no issues noted?

Appraisal vs. Inspection: Electrical and HVAC Systems

After reading the above, you shouldn’t be surprised to learn that an FHA appraiser is not required to be an expert in electrical systems in the home. FHA loan rules in HUD 4000.1, the FHA Single-Family Lender’s Handbook, require basics for the appraisal such as adequate capacity. The systems installed must be suitable to serve the entire home.

During the appraisal, will the appraiser be able to tell if a heating or air conditioning system is about to give out, or last another decade? And if no issues are noted with the appraisal, does that really mean there are no problems to find?

A Note About Examining the Roof

You might be surprised to learn that during the FHA appraisal process your appraiser is NOT required to step onto the roof to inspect it. You will need a home inspector to look at the roof to get an idea of its true condition and remaining life. Don’t trust the appraisal to give you this information.

Plumbing Issues

Any obvious or noticeable issues with the plumbing system may be noted during an appraisal, but there are no guarantees that the quick look your appraiser gives to the septic system and other areas won’t tell you much without a closer look by a trained expert.
Skipping the home inspection is a terrible idea, and you will definitely want to ask your lender and/or real estate professionals about inspections. What does your real estate agent say about skipping a home inspection?

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