Today we’re going to talk about appraisers and inspectors and what’s the difference.
What an Appraiser do
So an appraiser is actually somebody who comes out and does an evaluation of the property based off of the comparables that have sold recently close to you. So what does that look like, well an appraisal should be using comparables inside of the last 6 months under certain extenuating circumstances if you have a very unique property or you’re in a rural area they may push it out, but realistically in our market we’ve got 3 months. Ninety days is enough time to find a bunch of comparables wherever you’re at. Most realtors are able to do this. So there is your timeline. As far as your radius, your radius it should be less than one mile, again it depends if you’re in a rural area or a highly niche home then it’s going to be pushed out a little bit but the underwriters like to see it inside of a one mile radius preferably a quarter mile, if you’re living inside of the city.
The last piece and this is something that most people don’t even understand in my industry and it has to do with the gross adjustments. So what that means is let’s say you have a 4 bedroom 3 bath house that you’re trying to buy for $350,000 and there’s a 4 bedroom 3 bath house that’s $1,200,0000. Obviously there’s something different about it. Maybe it’s got a view of the lake, but obviously there’s something majorly different about it. Your gross adjustment shouldn’t be more than 25%, so it to make it easy on me $300,000 would be $75,000 in adjustments so it shouldn’t be too outrageous, but at the same time it should be it’s okay if it’s a little above or a little under. When you get your appraisal you’ll definitely get a copy of it because it is something that you’re purchasing. It’s required by the lender, but it’s just common sense. Don’t spend hundreds of thousands of dollars on something without knowing the real value. Your real estate agent definitely should have your interest in mind, but the selling agent is trying to sell that house for absolutely as much as possible to make their people happy so it’s important to have an uninterested third party coming and taking a real evaluation of it and tell you what it looks like.
Inspector on the other hand
Now that leads us into an inspection. It’s important to note that the appraiser does not look at the structural integrity of the house. They do by FHA standards have to do a head and shoulders inspection of the crawl space and attic which means they literally poke their head up into the attic and they look around for any kind of major problems and then they do the same thing for the crawl space, but they are not down digging around looking for issues on the house so it’s important to understand that your appraiser is not an inspector. Your inspector is the person who’s looking to make sure that everything on that house is sound that there’s no major, you know, foundational issues that you don’t have dry rot, that you don’t have a bug issue, that you know those kind of things.
I recently bought a house for my family and we had two basketball size wasp nests in the attic. They were hibernating because we bought in winter time, but it was good for us to find out because the appraiser would have never seen it. It was tucked up in around away from the access to the attic so they never saw it. The inspector is also going to be the guy to help you on the second part of your negotiation process. Your realtor should have already gone through this with you if you needed to know more about how an inspection can help you with negotiations, but basically the inspector will help you redefine the value of that house after you found everything that’s wrong with it. You want the inspector to find everything so a good little tip here is hire your inspector to come out when it’s raining because if it’s dry and there’s leaks in the roof he’s not going to be able to see it the same as if it’s pouring buckets and it’s you know seeping through the roof into the insulation. So it’s not necessarily getting into the house, but it is up in the attic somewhere, which will pose a problem for you later. What happened for my family is we bought the house and we had the inspector out when it wasn’t raining and there was a leak that occurred around one of the exterior windows. Ultimately it was a quick fix, but it’s still freaked us out for a second because we needed to figure out if it was leaking into the house it was causing issues with rot so learn from my mistakes and make sure to have your inspector come out when it’s raining if it all possible. Otherwise you have to do the best you can. Have him come out and check everything. Look for any signs of water, which is pretty standard for a good inspector.
If you have any questions feel free to reach out to me. Until next time, have a good day.