Occasionally I will hear someone way that since the mortgage company is going to do an appraisal, there is no need to have an inspection. A home inspection and an appraisal for a mortgage company are two different things entirely.
A home inspector will do a thorough assessment of your homes appliances, the structure, the roof, heating and air systems etc while an appraiser is typically interested in the “value” of the home as it relates to your lender making a loan. The bank wants to know if it’s safe to make a loan on this home. They do not do full inspections of those items that an appraiser would do.
Appraisers are looking to see if the home is of “like kind” for the neighborhood. Here’s what I mean. If the average home in the neighborhood is 3-4 bedrooms with 2 to 2.5 baths and the home you are considering has 1.5 baths for example. The appraiser will likely lower the value based on the abnormal number of baths for the area.
Another challenging area that I see are garage conversions. Often times the homeowner would argue that the converted garage adds heated and cooled area to the home and as such, should receive more value however the appraiser may very well look at it and say that most home buyers in that neighborhood *expect* to have a garage.
Room additions are another gray area. They generally will not get the value per foot that the rest of the home has. If homes are selling at $90 per foot as an example, the appraiser may only give the addition or add on, $30 per foot. The advantage of course is that it may allow a home buyer to get more square footage than he otherwise would have. Assuming that the floor plan works for them.
If a transaction is going to have a problem, most likely it will be during the inspection period. It may be wise to wait until the inspection has been performed and any repairs agreed upon before investing the money for an appraisal. While they vary based on the size of the home, the typical structural/mechanical inspection I see in the area is in the neighborhood of 350-$500. A termite inspection (a MUST in this area) generally will range from 60 to $100. It is always recommended that a buyer if at all possible, attend the home inspection. Plan on 3-4 hours out of your day but I promise you, it will be well worth the education.
An appraisal is around $400.
Certainly if you have any questions on appraisals and or inspections, you can give our offices a call at 713-898-1166.
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