Home appraisal and inspection reports?

We are pursuing a short sale and the inspection results will help our lawyer to negotiate the price with the bank. We are already aware of some issues with the property. Can (or do) banks do ther own inspection to help their appraiser give them a complete picture of all the problems with the home so they can decide if the low offer is justified or not? The apprasier, even if they entered the home, would not see some of the defects we know about. Thanks.

Update:

Would be a short sale. Lawyer says if previous owner willing to help they will negotiate with bank. Price to be negotiated will come from results of inspection paid by us. We know some of defects & some are hidden from view. We want our inspector 2 find as much as they can 2 justify our offer via short sale lawyer. Don't want our bank 2 know inspection details because appraisal could come in too low. Of course bank who would approve short sale can do what they wish, we would not control that.

9 Answers

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  • Mark
    Lv 6
    2 months ago
    Favorite Answer

    An appraisal is not an inspection.  In my experience, appraisers just do a walk-through, so unless something is obvious, it won't factor into the appraisal.  They look at sq footage, number of bedroons/bathrooms, whether the basement is finished (and they count below-grade rooms differently - caused a problem w/ my split level).  They are in and out in about 20-30 min.

    An inspector will look at the roof, mechanical systems, attic insulation, and check for signs of leaks or surface mold.  They will not open up walls.  They spend 1-2 hours.  Mortgage companies don't require inspections.

  • 2 months ago

    Inspections are the buyer's responsibility. You need to inform your lender because they will want to know about any existing issues the house has. That should work in your favor for a lower purchase price. Especially if you are going to be footing the bill to address those issues. If previous owners will help, that will also work in your favor. 

    The bank is not going to do any inspection. They do the appraisal--quite often this is a drive-by, not thorough, appraisal. They are just trying to see if the house is in decent condition, with intact roof, windows, the outbuildings they claim to have, type of exterior, etc. In your case, it might be more involved, but for a short-sale, they are probably just trying to see if the property is worth lending money on. 

    You don't say what these "defects" might be. There are a few things that would stop a mortgage lender from approval: mine subsidence, radon gas, foundation problems--but others wouldn't, such as asbestos, mold or water issues, lead paint hazard, etc. Those are repairable. Termite inspections are ALSO the buyer's responsibility to uncover and abate. 

    You CAN buy a house that's in short-sale or foreclosure even if it doesn't have plumbing or electricity--as long as you are credit-worthy and plan to repair or replace things--but you'll need to make sure your bank knows what you're planning to do with the property once you do that--and make sure they are aware of any defects that would need to be addressed.  

  • 2 months ago

    You might actually consider sharing what you know with the appraiser. If this causes the appraisal to come in low and the selling bank/ seller can't come down to that price then maybe you should be walking away from this one anyhow, rather than overpaying for the place. Anyhow, the appraiser really should enter the house but they aren't inspectors and typically don't find all the problems themselves. The bank almost certainly won't do an inspection, just an appraisal (and almost certainly won't pay for the appraisal either - you or possibly the seller is going to have to pay for that).

    Honestly I think you are probably wasting your time even pursuing this short sale which seems kinda iffy off the bat (as to whether the seller/ selling bank will even work with you).  You could easily spend 3 months or more going back and forth with the bank on the details only to have the bank demand, at the very last second, that you give them another few thousand or they'll kill the deal. Having a lawyer may help but it may or may not be enough to smooth out many of the problems.  Why don't you just buy a regular sale and not possibly put yourself thru months of hassle and annoyance only to get screwed over, by the bank, at the last second.  

    Don't say you are doing this because the price is so good. The reason the price is so good is to lure in buyers who don't know what they are in for but its also the reason the bank will demand more and more and hold up the sale for months.

  • 2 months ago

    Appraisers don't work for the banks.  They also don't do in depth inspections, but that isn't a bad thing.  You may not realize it but when real estate is being sold, the property isn't appraised until after the contract price has been negotiated.  Thus if the appraiser offers a much higher value than what the property is contracted to sell, it has no effect on the purchase contract.  

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  • L
    Lv 5
    2 months ago

    An Appraiser does NOT do all of the in-depth inspection as a Home Inspector does.  I'm sure the bank already knows what the Appraisal price is.  The issues, the Home Inspector finds, will be deducted from the purchase price.

  • 2 months ago

    The bank is going to allow access to an appraiser and inspector prior to you making an offer?

    -- I doubt it. 

    and your lawyers don't determine the price of the property, you do. 

    you can pay them to do work for you to assist in determining a price, but that is not very cost effective.  You want the lowest price you can on the property.

  • 2 months ago

    No the mortgagee doesn't do an inspection.  Here's how it works; a Realtor lists the property and when a reasonable offer is received the mortgagee will have the home appraised.  So unless those issues are obvious they will not be considered by the appraiser.  That establishes the bank approved price and any offers must be at or close to the bank approved price. 

  • Maxi
    Lv 7
    2 months ago

    Before any bank offers a mortgage on a property they survey/value it for their own risks, also based on what the previous owners owe them in mortgage ( if repossessed) If you pay for an independant inspection/survey then there will be a report detailing everything which any mortgage company you use could potentially ask to see ( although you do not need to show them as it is YOUR report)

  • 2 months ago

    It is fairly normal for a bank to have had an appraisal done for themselves, but they do not always do it.  It is normal policy, at least with commercial properties, to have both a valuation appraisal and an environmental appraisal before repossession or resale.  I don't have much firsthand experience with residential properties that way, but I would be surprised if they didn't.

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