A question we get a lot here at the Heights is whether it is necessary to get a home inspection done on a home that is being purchased. This is an interesting question that has two answers.
The first answer is that the home inspection is not a lending requirement. Home inspections are completed for your benefit and for your “peace of mind”. The underwriter will need to know the condition of the property, but they will obtain that information through the appraisal. One or the roles of the appraiser is to not only express the market value of the home, but also to confirm that the home meets the minimum property standards, as spelled out in the HUD handbook for property condition, 4000.1.
Having said that, there are certainly times that a home inspection will end up becoming required through the transaction. There are multiple different ways that this can come about, but all of them have similarities. If something else in the transaction calls into question the safety or condition of the home, it is very common for an inspection of one sort or another to then become required in order to confirm that the safety/condition is up to par. Some examples that we commonly see here at the Heights are from purchase contracts. Commonly, a buyer will want a seller to clean something or repair something small on the home before closing. The real estate agents will then write that into the purchase contract as a condition for sale. It is not uncommon for an underwriter to condition for a home inspection when seeing this in the terms of the contract to clarify the scope of what is being negotiated for and to confirm that the repairs were actually done in a safe and effective manner.
The second answer is ABSOLUTELY.
Because it is not a lending requirement, we often hear stories of Loan Officers advising borrowers to avoid getting a home inspection to avoid paying $300. Often, the story goes that you don’t really need it because the appraisal includes an inspection for condition anyways. This is only partially true in that the appraisal ONLY inspects for items that are specifically mentioned in the HUD handbook. A home inspection will cover every single item that the inspector encounters, regardless of size or importance so that you can get into the house with a full knowledge of everything that will eventually need to be addressed. Moreso, while an appraiser will definitely make a general inspection of the property, it is very uncommon for them to spend a lot of time and to dig as deeply as a home inspector will.
It certainly comes at an out of pocket cost, but finding out that there is a major plumbing issue hiding behind the walls of a home can potentially save you thousands of dollars down the line.