Appraisers, Inspectors & Underwriters (Oh My!)
I had a dream the other night that gave me some inspiration and caused me to awaken at 2 a.m. laughing. My husband groggily asked, “What’s so funny?” I answered, “Boy, do I need a vacation! It’s nothing, honey!” I’ll have to make sure he reads this article! The dream went like this……I was walking through some dark woods when I came upon a house. It was big and stately but kind of spooky. And there were people on the roof, hanging out of the upper windows, banging around in the garage and peering out of the kitchen door. And in the dream I heard chanting…..”Appraisers, Inspectors, and Underwriters, Oh My! Appraisers, Inspectors and Underwriters, Oh My!” It must’ve been the corned beef and cabbage!
As a seller and buyer, you simply must be aware of who else will be involved in your sale or purchase, how much influence or weight they will add to the discussion and how to handle the interjections and opinions of those folks.
A seller should disclose on the form entitled “Residential Property Disclosure” everything possible the form asks for, such as encroachments, flood zones, problems that were repaired or need repaired, etc. The buyer cannot and should not ask for items to be repaired that appeared on the property disclosure, as they made their offer based on having those facts before making the offer.
Once the offer is accepted, most folks choose to have a professional home inspection done. This is NOT required by the lender at all, but simply serves to inform the buyer of the condition of all mechanicals and life expectancy of the different components of the home. It should also not be used as a “bargaining chip” to renegotiate the price. Generally, only safety issues should be considered carefully when asking the seller for repairs. At times, the buyer opts to also have inspections for pests, radon, mold, etc. performed. Once all inspections are done, the seller will most likely be asked to address major concerns. And if the buyer backs out or the deal falls apart, the seller should now disclose those problems to the next buyer, or in the alternative, disclose that the problem existed and has been repaired, with receipts or certifications given as evidence.
Appraisers, on the other hand, have the task of appraising the home to see if the value is there for the lender. This is required for most loans and the appraiser is assigned to the property by the lender. This is generally done randomly and the lender has no control over who is appraising the home. Appraisers are licensed by the State of Ohio and can be certified for different types of loans. They are NOT home inspectors. However, they are looking at major components of the home to make sure they are up to par and function properly. Their report is forwarded on to the lender and ultimately the underwriter of the loan.
The underwriter, in turn, reviews the appraisal, looking for any repairs or concerns noted within and may require repairs or certifications by a qualified contractor. Even a conventional mortgage underwriter will take issue with the leaky roof or disconnected water supply. Everything must work and be functional unless the buyer has a special rehab loan that makes provisions for such things.
As you can see, issues can arise throughout the transaction process and various professionals can raise the warning flag about potential problems. It is up to the buyer and seller to agree to what should or must be addressed and who will bear the responsibility. And hopefully, you’ll never skip down the yellow brick road to find Appraisers, Inspectors & Underwriters (oh my!) hanging out of the windows!
(As appearing in The Canton Repository 3-25-16)