FHA Appraisals Versus Home Inspections For Home Buyers

This Article Is About  FHA Appraisals Versus Home Inspections For Home Buyers 

There are differences between FHA Appraisals Versus Home Inspections.

  • Home appraisals are mandatory and required by all lenders
  • However, home inspections are not mandatory
  • It is up to the home buyer whether or not they want to spend the money on a home inspection
  • Home inspections cost anywhere between $300 to $500
  • The cost depends on the area, type of property, and how thorough the home buyer wants the home inspected
  • Home inspections are strongly recommended
  • Many folks are under the assumption that an FHA Home Appraisal is more thorough than other types of home appraisals
  • Therefore, a home inspection will not be necessary
  • This is not true
  • A home appraisal will only check the home to see if the subject items are in compliance and in working condition
  • They will not thoroughly inspect whether the inspected item is in good condition and/or longevity
  • For example, the appraiser will check for water in the basement but not if there is a cracked foundation
  • The appraiser will not check for an old furnace that is on its last leg. They will just check whether the furnace is working

In this blog, we will discuss FHA Appraisals Versus Home Inspections.

We write about FHA home loans, the FHA appraisal process, and why the appraisal should never be used in place of a home inspection to determine the condition of the home.

Risks With Not Having A Home InspectionFHA Appraisals Versus Home Inspections

A home inspection is an insurance policy that the home is in good condition.

  • If there is an issue with the subject property, the home buyer can either cancel the purchase transaction and/or request the repairs to be completed
  • Or they can get a cash credit by the home sellers and decide to do the work themselves
  • Home buyers who do not arrange for a home inspection and just rely on the FHA Appraisal are putting themselves at risk when buying a home
  • An FHA Appraisal will not uncover hidden issues

There are major differences between FHA Appraisals Versus Home Inspections. Appraisers do inspect the home. However, they inspect the home for safety and health-related issues and do not inspect the home for wear and tear and hidden problems.

FHA Home Appraisal GuidelinesGustan Cho Associates

Here is what an appraiser needs to do when inspection a home’s attic area:

The Appraiser must observe the interiors of attic spaces. The Appraiser is not required to disturb insulation, move personal items, furniture, equipment or debris that obstructs access or visibility. If unable to view the area safely in their entirety, the Appraiser must contact the Mortgagee and reschedule a time when a complete visual observation can be performed, or complete the appraisal subject to inspection by a qualified third party. Furthermore, when access “through a scuttle is limited and the Appraiser cannot fully enter the attic, the insertion of at least the head and shoulders of the Appraiser will suffice…If there is no access or scuttle, the Appraiser must report the lack of accessibility to the area in the appraisal report. There is no requirement to cut open walls, ceilings or floors.

On the above quote from HUD 4000.1 FHA Handbook, the appraiser is not required to do a thorough inspection of the attic to search for issues. On the other hand, home inspectors do an in-depth inspection of the attic area.

HUD 4000.1 FHA Handbook Guidelines goes further and states the following:

An observation performed in accordance with these guidelines is visual and is not technically exhaustive. 

Home buyers need to realize the difference between FHA Appraisals Versus Home Inspections. It is highly recommended buyers invest the money for a home inspection when buying a home. That few hundred dollars can save homeowners tens of thousands of dollars in the future. For more information on this topic and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at [email protected] The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, holidays.

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