Appraisals, Inspections, & Home Hazards

After an offer is accepted on a home, an appraisal and inspection should be performed. These are important steps that should not be not skipped. The process of having an appraisal or inspection done can be stressful, but they are meant to protect the buyer and lender from overpaying for a home, and from purchasing a home with big problems. Learn more about the appraisal and inspection processes, and become familiar with home hazards you should be on the lookout for. 

Home Appraisals

A home appraisal is when a licensed appraiser determines the fair market value of a home. Lenders require home appraisals to keep from overpaying for a home. The lender typically chooses the appraiser while the buyer covers the fee. Most home sale contracts include an appraisal contingency that allows the buyer to walk away from the home sale if the appraisal comes in too low to justify the agreed-upon purchase price. Appraisers take visible defects into account, but are not searching for specific problems. Appraisers look at the living condition of the home, home improvements that have been made, and nearby home values. Home appraisals are often used to determine property taxes. The appraisal process can take a few days to a few weeks, depending on the appraiser.

What to remember about appraisals:

  • Buyers:  Buyers should avoid offering too much over the asking price of the home, appeal the appraisal if needed, and remember that it’s to protect them from overpaying for a home.
  • Sellers:  Sellers should attend the appraisal, tidy up the home, provide a list of upgrades and improvements, and provide a list of comparable properties if they know of any.
  • Refinancers: Refinancers should get an outside opinion, declutter the home, and provide a list of upgrades and improvements.

Home Inspections

A home inspection is a noninvasive, visual examination of a property and systems of a home. If the inspection reveals problems, buyers can negotiate with the seller to lower the home price or arrange for repairs. Most home sale contracts include inspection contingencies that allows the buyer to walk away from the home sale if the inspection reveals a large problem or many problems. The buyer is responsible for scheduling the inspector and covering the fee. Most REALTORS® have relationships with home inspectors, so buyers can ask their REALTOR® to choose the inspector. While lenders do not require inspections, it's a very important step that should not be skipped. Inspections protect buyers from purchasing a home with large, costly problems. Bringing in a qualified inspector can limit your risk of future repairs and help you gather the information you need to make a large decision. Most homes have a few small/minor issues, but buyers should try not to get caught on the number of defects an inspection may reveal. Instead, they should look at the severity of the defects. 

What does an inspector look at?

  • Grounds and Exterior: Foundation, septic tank, drainage, crawl spaces, windows and doors, siding, brick, paint, gutters, shingles, chimneys, detached garages, fences, decks, etc.
  • Basement: Moisture, water, etc.
  • Attic: Insulation, electrical splices, vents, etc.
  • Bathrooms: Visible plumbing, water pressure, tubs and showers, toilets, etc.
  • Kitchen: Plumbing, vents, garbage disposal, appliances, water flow, etc.
  • Interior Rooms: Floors, walls, ceilings, doors, lights and switches, outlets, HVAC, fireplace, smoke detectors, risers, stairways, etc. 
  • Electrical Systems: Wiring, service panel, cables, splices, etc.
  • HVAC: Gas odor, operating conditions, filters, rust, etc.
  • Plumbing: Rust, water pressure, hot water temps, leaks, condition of pipes, etc.

Home Hazards

Home inspectors are great at finding structural problems, but be sure to double check for more serious, unseen problems. A few serious dangers are typically not covered by home inspections and can be hazardous to your health. These problems are typically found in older homes. If you're buying a new home, these dangers are unlikely. But all homeowners should be aware that these hazards do exist. 

Well Known Home Hazards:

  • Radon: Radon is a gas that comes from the breakdown of uranium in soil, rock, and water. It can move into your home through cracks in the foundation. Learn more about the dangers here.
  • Asbestos: Asbestos is a group of naturally occurring fibrous minerals that are resistant to heat and corrosion. Asbestos has been used in products such as insulation.Homes built between 1930 and 1950 may have asbestos as insulation. Learn more about the dangers here.
  • Lead: Lead is a naturally occurring metal. It has been used in a variety of products including paint, plumbing pipes, and more. If your home was built before 1978, it’s likely to have lead-based paint. Deteriorating lead paint can be hazardous. Learn more about the dangers here. 
  • Mold: Molds are usually not a problem indoors and can be fixed yourself if it’s in a small area. They can occur in areas that hold a lot of moisture. Learn more about the dangers here.