On inspections and appraisals
Some tips on what to do and whom to see to get the best value when buying or selling a house.
You know confusion looms large when Google offers more than three dozen pages on a search of this topic:
Appraisal vs. home inspection.
An appraisal determines how much a home is worth, which in turn will determine how much someone can borrow to purchase it. If a buyer needs a mortgage, an appraisal is inevitable.
"It's an appraiser's job to offer an unbiased opinion" on monetary value, said Bennie Waller, professor of finance and real estate at Longwood University near Richmond, Va. A home inspector issues an unbiased evaluation of condition.
An appraiser "doesn't have to have training if the heat pump is working properly . . . [just know] if it will pass muster. But the home inspector will offer his opinion on [its] life span," Waller said.
"The consumer wants justification to spend half a million. Is it a mess? Or is it a yes?" said Nick Gromicko, founder of InterNACHI, the International Association of Certified Home Inspectors, a training group. Typically, he said, the agreement of sale includes a threshold dollar amount for necessary repairs the seller will credit the buyer.
Consumers have vehicle-history services such as Carfax at their disposal to look up details about used cars they're interested in buying. They don't have similar recourse with previously owned homes.
A new tool that accompanies some listings on Realtor.com, offering information via agents and Porch.com, the find-me-a-professional-remodeler website, holds the possibility of becoming a similar resource for home buyers. But recent attempts to use the Porch Home and Neighborhood Report tool were unsuccessful.
Said Waller, who also tried to use it: "It doesn't seem to be mature yet."
What has matured over the last four decades is the home-inspection industry. In the 1970s, professionals such as roofers and electricians would examine a house under agreement of sale, but only the part they knew. Often, these people were related to the new homeowner, said David Goldstein, an instructor at the Building Inspectors Career Institute in Robbinsville, near Trenton.
But consumers wanted more - they recognized the need to have the whole house checked out, Goldstein said, and while plumbers knew plumbing, they didn't know roofs, so the home inspector profession evolved.
Gromicko, who is based in Boulder, Colo., said about half the states, New Jersey included, require inspectors to be licensed.
In Pennsylvania, said Thomas Woods, an associate broker with Keller Williams in Blue Bell and a 30-year veteran of the industry, inspectors must belong to an association that adheres to regulations, such as InterNACHI (www.nachi.org) or the American Society of Home Inspectors (www.ashi.org).
Woods, who also teaches real estate, said a good agent will ensure that the inspection happens before the appraisal. That way, if the prospective buyer rejects the house, money is not wasted on a mortgage application. Also, a good agent will offer a few inspectors' names to the buyer, to avoid any bias recriminations.
One name that pops up a lot is Alan Cross, owner of All-Star Home Inspections in Pennington, N.J.
"I do two to three a day. I work six days a week," said Cross, 51, in his 20th year of crawling through attics, scaling roofs, and "running into raccoons and squirrels."
He is not required to "enter under-floor crawl spaces and attics that are not readily accessible," according to ASHI's standards, which are very similar to InterNACHI's. But he does. "Do I have to walk the attic? Yes . . . there will be a broken rafter or wire chewed by a squirrel."
And yes, he walks the roof. And he opens every window, though both groups' standards say only that he has to open a "representative" number. (Waller said Cross is doing the right thing. Gromicko said inspectors have only so much time, and there are more important things to examine.)
Cross and Goldstein, who is an ASHI instructor, have noticed this change in homeowners over the years: They are relatively ignorant about how a house works. A small problem morphs into a catastrophe.
"People can't fix things themselves," Cross said.
He spends lots of time educating clients, but he said he doesn't mind - he loves his job.
Goldstein doesn't play Mr. Chips. He may tell new homeowners that they need to caulk and grout, "but they have no clue how to do it."
"I get amazed at a first-time home buyer who is buying a 200-plus-year-old home," he said. Their idea of maintenance? "Pick up the phone and call the super."
For prospective homeowners who would like to know which questions they should ask a home inspector, Realtor.com offers a Realtor magazine primer at http://goo.gl/kpBrTX.