September 2, 2014
A reader got in touch recently with the following: “I recently purchased a home with foundation issues. It was not required of me to get a home inspection buy the realtor. However it was required of me to get an appraisal by the realtor.”
“It is unfortunate for me that I could not be there during the time of the appraisal, the real estate agent was there . It is also unfortunate for me that I did not survey the garage where the damages exist. Is it proper for a licensed real estate agent to sell property without disclosing foundation issues? I also got an FHA Loan to purchase this property.”
It is true that FHA appraisals are required, and home inspections are not. However, no borrower should purchase a home without paying for a professional home inspector to review the property for issues such as the ones raised in this reader question
Why?
FHA loan rules make it clear that a home appraisal is NOT a guarantee that a home is free from problems, defects, poor workmanship, etc. An FHA appraisal is NOT a top-to-bottom review of the home’s condition. Just because your property “passes” the FHA appraisal does not mean it is in perfect condition. The appraisal establishes the fair market value of the property and insures that the home meets the FHA’s MINIMUM standards.
A home inspection is much more thorough and will involve an up-close look at areas of the home that may have been reviewed during the appraisal and many more that likely have not. An FHA appraiser is not required to step out onto the roof, for example, and is not required to be an expert in electrical wiring, plumbing, or foundation issues.
When you make a major investment such as the purchase of a home, it pays to budget for the expense of a home inspection. The hundreds you pay now can save you thousands later on.
With regard to the reader’s specific question, “ Is it proper for a licensed real estate agent to sell property without disclosing foundation issues? “we can’t address legal issues–that’s outside the scope of this blog–but the reader is encouraged to discuss the matter with the local authorities to learn what may be legal and what is not legal in the borrower’s state and take appropriate action where necessary.
Do you have questions about FHA home loans? Ask us in the comments section.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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