Home Inspection Combined with Appraisal Services

[JasonLight]

We are a new appraisal company and are just getting ramped up on the millions of scenarios in the appraisal world. I am thinking of offering home inspections as another product. I know several realtors and could get a decent flow of business. My question is, have any of you thought about adding this to your company? Any downfalls? Your help is appreciated as usual.

Thanks,
Jason

 

[Jeff Horton]

I do both and here are some things to think about.

Crawling through attics when it's over 100 degrees wondering why in H*** you wanted to do this. Crawling on your stomach in the dirt in a crawl space with cobwebs and snake skins. Crawling in wet crawl spaces.

Can you say HIGH LIABILITY? Unlike what most appraiser think I don't believe that Appraising is that high in liability. Home inspecting is! What if you inspect a house and it burns and someone is injured or killed. Try defending that before a jury. Lawyers will play on the sympathy routine not whether you were negligent. What you did doesn't matter, it is what they can make the jury think you didn't do.

Scared you off yet? If not then you might be a good inspector. How much do you really know about house construction? Electrical systems? Plumbing? Are you a good detective? Are you curious? Often times something very small and innocent looking is clue to a big problem.

Now that I have said all that I am not trying to talk you out of it. Scare you? Yea. Home inspection is not a job to take lightly.

Depending on where you are and how populated your area is you may find like I do that it barely pays for itself. You mentioned Realtors and I assume you meant you thought you could get work from them. Bad idea! You don't want references from Realtors because it looks like you are working for them. As an Inspector you have to be independent and can not appear even remotely to work with a Realtor.

I just reread this and it sounds really negative and maybe that is not all bad. If you read this and still want to do it then no doubt your serious! 8)

 

[Mike Garrett RAA]

Nothing wrong with having a home inspector in your company but doing both is a stretch. As for me, I am an appraiser, not a home inspector!

 

[Richard Carlsen]

Jeff made a very good point about getting referrals from brokers. When I sold real estate, my policy was that we would not recommend any inspectors. Period. We did not even give out phone numbers but referred the buyers to the yellow pages. It was up to the buyer to find them, contact them and make their own choice based on their talks and the product offered.

I would not count on getting brokers to be a good source of referrals for home inspections. Besides, if you do your appraisal business well enough, you won't have any time left for home inspections.

 

[Bemis Pownall]

I wouldnt do home inspection...liability!

Lots of appraisers offer REALTORS a sketch of their listings for $100+/-.
I know one appraiser who doesnt appraise anymore and only does sketchs and does well.

:icecream:

 

[Farm Gal]

OK,

I see both pro's and con's to this idea.
I have a different take on this than some of you all!
I am going to assume that the man IS fully competent to perform a home inspection!

Pros:
1. He is already there.
2. Some of the questions that we 'as appraisers' wind up wishing we knew answerd would be resolved by his more invasive and investigatory crawling through the house!
3. His liability as the home inspector is quite probably covered in areas that we as appraisers are concerned about and are NOT covered for by OUR E&O! So other than the potential for insurance companies fighting with each OTHER, who cares! (I'd check THIS out very very carefully BTW 8O )

Cons:
1. A little knowlege is a dangerous thing, and a LOT of knowlege can be a VERY dangerous thing! To wit: if an appraiser is valueing a home as an appraiser using the viewpoint of a typical homebuyer (only minimally educated as to the potentials for disaster extant in every non-new home) it is a very different matter than the KNOWLEGABLE individual who also has some very dangerous 'under the hood/kicked all the tires' opinions about the house!
Specifically: On occasion I find it VERY difficult to seperate MY knowlege of underlying problems I observe (and would personally NEVER buy into) from the market reaction of the typical (I don't care about no foundation 'cracks' or that little bit of water in the basement) homebuyer!

Disclosure of defects or not, you still have to seperate the knowlege base you (the experienced person) have from that of MR Joe & MRS Jill Is-The-Paint-Pretty? homebuyer in order to properly 'estimate MARKET value'!

2. If it takes x hours to produce one report (home inspection) and x hours to produce the other (appraisal) and you run into ANY glitches that would cause either process to be prolonged.... it could make a LOT of people doubly angry at you! If one professional report is delayed, and another is likewise delayed, clients tend to shrug and not get as mad at whoever gets theirs in first, and tend to view the 'last in' as only delayed by that period inexcess of the 'first in' report.

If you are doing BOTH (just trust me on this): YOU, personally are to blame for anything and everything else that is going to go wrong in the entire process! Inclusive of potential legal action. 8O
And that is where I think your liability increases in excess of reason.

3. How would you deal with defects which you observed? A good inspector is going to develop knowlege of numerous issues which require addressing: are you going to place repair requirements on all defects? E-YEWW! Plan on a shor career in both fields! Most underwriters never see Home inspection reports.... and sail on in happy bliss!

so: my thoughts!

Worth exactly what you paid for 'em!

Buen Suerte!

I did give this 'combination of jobs' some thought. I discarded the idea myself. That gutsy I was not, then or now. IF however the industries change further, I will take it under reconsideration. 8)

 

[Frederick R. Ruffell]

I had thought about it and decided against it for all the reasons above AND it would seem to me that when sales are numerous I should be too busy doing appraisals, and when sales are slow so are the inspections.

 

[Ida S. Romo]

Jason,

In my humble opinion........too much liability........especially if you also do FHA appraisals.

Ida

 

[Richard Carlsen]

Remember your fiduciary responsibility to your appraisal client. Anything you turn up in the house inspection as a home inspector and have knowledge of, no matter where you learned it, that may have any effect on value, must be disclosed in the appraisal report.

Do you really want your appraisal report to turn into a home inspection report? I see that as really opening up a can of giant worms. If you do put everything in your appraisal report, you will be inundated by UW's for addendums, comments, etc. If you leave it out, you could be in violation of USPAP and face significant liability for purposefully omitting the information.

 

[Bill_FL]

Here is another senario. Suppose you are a trained home inspector. But you are only hired to do an appraisal. The client knows you are also trained as a home inspector. After the purchase, the home falls down due to shoddy workmanship. You are now on the witness stand. The opposing lawyer says so, tell me about all of your qualifications. After your response he asks, And you couldnt tell this house was poorly built?

Are you to answer, but I was only wearing my appraisal hat?