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Difference between FHA appraisal and private

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LUCINDA574

Thread Starter
Freshman Member
Joined
Nov 28, 2007
Professional Status
General Public
State
Indiana
Hi I am new to your boards and have enjoyed over the last week reading all your posts. I am not going to claim to understand it all, but I appreciate more all the hard work you do.
Little background, husband and I are getting ready to offer on a home, we are first time homebuyers, financing through FHA. If I understand the process, a FHA inspection will be done and it is suggested that we also have an inspection done if I have read everything right.
My first question is should we have our own done before the FHA one is done or should we wait till the FHA is completed?
We have also wondered if we should possibly have one done before we even offer. The home is a well maintained 2 story brick, 1700 sq feet 4 bed,2 ba with finished basement that has been converted to a family room/ bar area with its own restroom and even small pantry area with a 4 burner stove top and fridge and sink. This is an estate, the prior owner lived in it for 65 years till his death in May.
We are concerned because of reading here I saw that homes with screw in fuses normally needs to be upgraded etc, and I dont want to waste the money on doing our own inspection if there is no way it will pass FHA as I dont know if the estate will be willing to do any reapirs/upgrades as needed.
I guess my main question, can you tell me the difference between an FHA appraisal and one I commision to have done and would you wait for the FHA one to do yours or do it prior? thanks so much.

also- we are in Indiana, Mishawaka area
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
An appraisal 'inspection' is NOT a 'home inspection'.

A home inspector will check all systems, climb and crawl, etc. The home inspector will tell you all about the house, but has nothing to do with coming up with an opinion of value. The FHA appraiser would love to have a copy of the home inspection report!!!

The FHA Appraiser is only going to check on what is readily obvious without having to move anything, climb anything, or crawl under anything. The appraiser is there to 'observe' the property and forumulate a justifiable opinion of the market value of the property per the definition of market value that is on the Fannie Mae appraisal forms.

An old electrical system using a fuse box will raise concerns! What you need to know is that it probably will not handle the electric appliances you are used to being able to just plug in, (no, you cannot use both the coffee pot and the microwave at the same time). As a FHA appraiser, I would be very strongly recommending a full electrical inspection of this property by a licensed electrician. It is highly probable that there are numerous wires in the walls that are no longer fully functional, very possibly dangerous, and that the electrical system throughout this house should be replaced/updated. This issue could very well cause problems with FHA financing, with very good cause. FHA would like to know that you will not have the expense of having to replace the electrical system (or any other expensive repairs) within your first couple years of ownership.

The FHA underwriter will have the final say on almost all potential inspections and necessary repairs. The appraiser, for most things, just recommends what should be inspected further and/or repaired.

So, having a very well qualified home inspector is the FIRST thing you should do. Unfortunately, you should be wary of any recommended by anybody that willl make money on your closing this deal. Give a full copy of the home inspection report to the appraiser.

Side thoughts:
If this property still has an old electric system with a fuse box, what else is 'out of date' and should be/needs to be replaced??? How much of what should be/needs to be done can you afford within the next two years?????
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
FHA does not want borrowers buying a money pit, where you will have to pour a lot of money into the home, especially in the first few years. I want to echo Pam's comments, that there is a huge difference between an appraisal and a home inspection.

Screw-in fuses by themselves are not much of a problem. They actually work quite well and have lasted this long. A bigger concern would be the overall rating of the electrical service. Many olders homes (pre WWII) have ony 30 amp 120v services. In today's world, a 1700 SF house would need at least a 100 amp 120/240 volts or 120/208 (depending upon your utility) and preferably a 200 amp service. If the service is too small, you cannot buy toys such as electric dryers or HVAC units.

An appraisal will only note items that are apparent and might affect market value. During an FHA inspection the heating/cooling will be checked as will the hot water and water pressure. The electric lights will be switched on and off and random receptacles will be tested. And may GFCI's will be required in certain areas depending upon your local codes. The roof will be observed from the ground, and the appraiser will poke their heads into any crawl space and attic space. Mostly looking for pest/water damage, though cut away joists is a common attic problem. Often joists get notched by the HVAC people running ducts which can be problematic, especially in heavy snow country.

So making an offer contingent upon a home inspection by a reputable inspector. Don't let your Realtor choose the inspector, but do the research and find your own. You want one that will advocate for you and not the Realtor's commission check. You may have to interview the inspector, and pay him yourself. But make sure that the inspector is really working for you. Ask for some sample reports and look for weasel clauses. If the report is full of disclaimers then you may want to move along. All reports will have some type of disclaimer, but big blanket disclaimers are a warning.

The second kitchen is possibly a code violation, as it makes it a duplex with rentable space. That would be a bigger red flag than screw-in fuses. I was in the electrical business for many years, and I think that fuses have certain advantages over breakers.
 

Thomas Fiehler

Senior Member
Joined
Jun 2, 2003
Professional Status
Certified General Appraiser
State
Ohio
Gotta agree with the first two replies. Just get the "Inspections" completed before the appraiser views the property. That way, if there are major issues, you can walk from the deal and not be out the appraisal fee on that house.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
Both posts above are very good. It benefits any potential buyer to obtain a home inspection first, because issues may be found with the house that cancels the deal. This will save you paying for an appraisal you will not need (if they were ordered at the same time). I would be concerned with the permits as well for the conversion, were the changes made per local codes and followed up with proper inspections. Going FHA on a situtation like this could be tricky, I have seen buyers do the required repairs before settlement (estate or foreclosure situations where the seller will not do them) and then for one reason or another the deal does not go through, so be very cautious of how you proceed. Like the other two posters said, make sure you find a good home inspector, there is a wide range of expertise in that field. Good Luck :)
 

LUCINDA574

Thread Starter
Freshman Member
Joined
Nov 28, 2007
Professional Status
General Public
State
Indiana
ty,ty so much for the info. We are doing a final look before we offer next week so will really take a hard look at things before we go any farther. I have no problems paying for the inspection, I dont want to waste money, but I dont want to fall in a money pit either. The wiring worries me, I was in an electrical fire as a young adult so I have a little of a phobia of it. Also the whole duplex thing, is there anyway for me to figure out if its against code before hiring an inspector?
The house went through major updates in the 80's, they added a builtin fridge subzero fridge and new furnace and cental air. Is it possible the service was updated then but kept with fuses?? the box has like 10 fuses and then two smaller black bosesd on the side of it.Do you think if I took a pic of the fusebox/wiring some one could at least tell me what kind of service we are dealing with before I even order the inspection? If its the old 30 amp we might as well not even bother because this is an estate, I dont see them wanting to put any money like that in it.
I dont know if this is allowed but here is the house we are thinking about buying.I am sorry if its not.
http://www.cressyeverett.com/listin...listingcid=9972&fid=9&navn=&&&posc=&post=&cfq=&
 

Doug Trites

Junior Member
Joined
Oct 17, 2007
Professional Status
Certified Residential Appraiser
State
Michigan
I agree with the other post about having your own inspection. However, I recommend that your have some one who is license in the area they are inspecting. A lot of home inspectors hold no license and some will try to limit the liability amount to the inspection cost. I have always said to have the area's inspected that you are not sure of. So if it is electrical, have an electrician do the inspection. Then if they make a mistake you can go to the state they do not stand behind the report. This is true with plumbing ETC. If the system is the old fuse, the cost for upgrading is not that high as long as the interior wiring is not old knob and tub.
 

TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
Do you have a buyers agent? If not the listing agent should be able to do the permit research for you, either one. Some counties have permit records online now.
 

Lobo Fan

Elite Member
Joined
Nov 28, 2004
Professional Status
Certified Residential Appraiser
State
New Mexico
Actually, the old knob and tube wiring is superior to today's romex. Except that it is not grounded and often the insulation was asbestos. Other than that, it was a very good system. It is hard to tell what is hidden in the walls as certain bugs and rats like to chew on the insulation. That is a good reason to upgrade to a breaker panel with the new arc guard breakers.

As far as checking out the zoning, that can often be found on-line or with a phone call. I prefer to call just to make sure, especially if you have an iffy deal like the one you describe. Often just removing the second stove will get you back to conforming. Many times I have seen the stove out on the back porch just waiting for me to leave.

A good inspection can save you a lot of heartburn. Try and get the best one you can find. Often grumpy old guys will be the better ones.
 

Webbed Feet

Elite Member
Joined
Feb 11, 2005
Professional Status
Certified Residential Appraiser
State
Canada
I agree with the other post about having your own inspection. However, I recommend that your have some one who is license in the area they are inspecting. A lot of home inspectors hold no license and some will try to limit the liability amount to the inspection cost. I have always said to have the area's inspected that you are not sure of. So if it is electrical, have an electrician do the inspection. Then if they make a mistake you can go to the state they do not stand behind the report. This is true with plumbing ETC. If the system is the old fuse, the cost for upgrading is not that high as long as the interior wiring is not old knob and tub.

I bingo, roger that, ditto, and Rubber Ducky back acha, Mr. Trites opinion of who should inspect what. A "Home Inspector" is not enough. Too many people start and finish with using a home inspector, then a year or so later start finding all the crap the home inspector missed. But due to the copious twenty-seven pages of disclaimers in the home inspectors inspection "report" find out they are screwed and have no recourse.

Webbed.
 
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