Closer Inspection--Appraisals, inspections and savvy homebuyers
Closer Inspection: Appraisals, inspections and savvy homebuyers
by Shari Held
for Custom Publications
A lot needs to be done in the time between making an offer on a house and closing on it.
"Everything moves very quickly once an offer is made," said Diane Brooks, a Realtor with F.C. Tucker's Suburban North office. "The title work is ordered, the buyer applies for a loan and the home is inspected all within two weeks after the offer is accepted."
The home appraisal and inspection both are integral aspects of the homebuying process. In simplest terms, the appraisal assigns a dollar value to the home, and the inspection details the home's condition.
Under the microscope
Home inspections aren't required by law in Indiana, but Brooks said that having one is money well spent.
"If there are any major defects in the home, they need to be repaired by the seller," she said. "This must be written into the purchase agreement by the Realtor. It's also a good way to determine what your expenses will be, short term and long term."
Bill Koehnlein of B.K. Inspections compares a home inspection to "kicking the tires and taking a spin around the block" before buying a car.
It takes up to three hours to perform a thorough inspection that includes the roof, exterior, grounds, major mechanical systems, interior (windows, doors, outlets, appliances and toilets), attic and crawlspace.
The base price for an inspection of a 3,000-square-foot home is approximately $250, Koehnlein said. Inspections for termites, lead-based paint, radon, well and septic, water quality and exterior buildings typically are available for an additional charge.
Besides identifying defects and potential problems inspectors help educate buyers about home-maintenance practices, Koehnlein said.
"Even if there's nothing wrong with the home, when you get a home inspected, you've bought yourself peace of mind," he said.
Catering to the marketplace
Unlike the inspection, the lending institution orders the appraisal, and the appraiser operates as its contractor. The lender uses the appraisal to assess whether the loan would be covered by the subsequent sale of the home if the homeowner were to default.
"The biggest misconception is that many homeowners think they own the appraisal and are in charge of the process," said Larry Mitchell of Mitchell Appraisals. "The homeowner pays for the appraisal, but the bank owns it."
An appraisal depends on market-driven factors, such as what features currently are in demand, how long the home has been on the market and the selling price of comparable homes in the neighborhood.
An on-site visit is just a small piece of the appraisal process. Much of the appraiser's time is spent pulling comparable listings and visiting them, looking at the neighborhood and studying flood reports and tax records.
Both the appraisal and the home inspection can provide helpful information for a homebuyer when negotiating price with the seller.