HOME INSPECTIONS AND APPRAISALS
The home inspection is a necessary step to the home buying process. Even if the house looks perfect from the street, you need to find out what condition it’s truly in.
1. You should always get a home inspection when buying a house, even if it’s brand new. Inspectors are trained to find structural and systematic flaws that the average person cannot see. The inspector will examine the roof, the foundation, electrical system, heating and cooling, etc.
2. Choose a home inspector that is certified / licensed by one or more professional organization, either the ASHI or the NAHI. In fact, you can use either of these two websites to find an inspector in your area.
3. If you get the chance, follow the inspector through the home during the course of the inspection. You’ll be the “maintenance supervisor” once you buy the place, so you may as well learn about it early.
4. I also recommend getting a termite inspection if you live in a state where termites are active (which is most states). You probably won’t pay more than $150 for this inspection, and it’s well worth the price. Termites can do tremendous damage to a home, so you need to know if the one you’re buying is infested or not.
5. Shortly after you make an offer on the home, the mortgage lender will have it appraised. They will send a professional home appraiser to evaluate the property against comparable sales. The lender does this to protect their interest in the home, and to make sure it’s worth the amount you’ve agreed to pay.
6. If the appraiser determines that the home is worth the amount you plan to pay, then you’re in good shape. But if it comes in “under appraisal” — meaning you have offered more than the current market value — you have another hurdle in your way.
7. When a home comes in under appraisal, the seller will generally lower the asking price to meet the appraised value. This allows the process to move forward. If a seller refuses to lower the price, you should seriously consider walking away from the deal. It’s rarely a good idea to pay more for a home than it’s worth. This creates a negative equity situation, right from the start. This is why your initial offer should be contingent upon a successful appraisal.