In my last post we talked about making an offer. In this post we’ll talk about Inspections and Appraisals.
Congratulations! Your offer has been accepted and you have started your journey towards the closing. Part of that journey includes inspections and an appraisal of the home. So what types of inspections are needed, and what’s the difference?
Home Inspection: A full home inspection is done by a licensed home inspector and includes a comprehensive written report on the condition of the home and its major systems. The purpose of the home inspection is to let the buyer know about the overall condition of the home. A home inspection is not required, but I always recommend having one completed. More times than not it reveals things about the home that the average person cannot see. A few things that home inspections examine are the condition of the roof and structure, plumbing, electrical and HVAC system. Plan on spending a few hundred bucks on home inspections. Costs can vary, but it is usually based on the square footage of the home.
4-Point Inspection: The 4-point inspection looks specifically at the roof, plumbing, electrical, and HVAC to ensure they meet the minimum standards for insurance companies in Florida. Most home inspectors can provide this report as part of the home inspection process, and (since you’ll most likely need it anyway), I recommend having it done at the same time.
Wind Mitigation Inspection: The “wind mit” inspection looks specifically at the roof condition and type of roof construction, to include the connection points from the roof to the rest of the structure to determine its uplift resistance. This inspection also checks other exterior openings such as garage doors and windows. As you may have guessed, this is all to determine how protected the home is from high wind. Since a better-built home with a newer roof is less prone to wind damage, a good wind mitigation inspection report can help reduce your insurance premiums.
WDO Inspection: WDO stands for “wood destroying organisms” and this is commonly referred to as the termite inspection (though it also looks for other things that destroy wood, like mold and fungus). This inspection is highly recommended, for obvious reasons, and is required on some types of mortgages such as VA loans.
Specialty Inspections: Most home inspectors also offer an array of specialty inspections such as a sewer line scope, mold and radon testing, or inspection of specialty equipment such as a septic tank, pool, or irrigation system. These tests are not always necessary, depending on the age, condition, and location of the home (and they can drive up your inspection costs considerably), so it’s best to discuss these with your buyer’s agent and/or home inspector prior to ordering them.
Appraisal: An appraisal is done by a licensed property appraiser which is an opinion of the value of the property for the lender. Most lenders will require a property appraisal (and will order it for you as part of their processing of your mortgage loan) to make sure the home appraises for at minimum the amount of the offer. Several factors go into determining the value of the home like recent sales of comparable homes in the area, location of the home, condition of the home, proximity to schools, etc. Unless you’re making an all cash offer, count on an appraisal being done.
Dealing with Problems: Dealing with inspection and/or appraisal issues, and negotiating solutions to these issues, is where your buyer’s agent earns their keep! Realtors are trained to deal with these problems and negotiate on your behalf, and your agent will guide you through the process and discuss your options if an inspection or appraisal issues comes up.
Ready to start shopping? Don’t miss the next post in this series where I talk about getting to the closing table.
Rob Reed is a REALTOR in St Petersburg, FL that specializes in working with first time home buyers.
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