Atlanta Inspection News! Consumer information: Appraisers - Inspectors: Line Blurring? Accurate Home Inspection of Atlanta

By David Brauner, Editor
 

In a recent Working RE story, Appraiser: I'm No Home Inspector, appraiser Tony Bamert says he is asked to do work that he is not qualified for- namely that of a home inspector. Several home inspectors say they know how Bamert feels.

With 17 years experience, five as the head of his own firm, Bamert is fully familiar with standard procedures, and feels these requests are pushing him beyond that norm. "As an appraiser, my job is to go through the house, take notes and use comparables to come up with a value for that property," he explains. "That's completely different than the role of a home inspector. Now they are asking the appraiser to test some of the mechanical systems and give a statement if they are in working condition."

 Bamert says he's not comfortable with such requests, nor does he have the expertise to make such an evaluation. "On an FHA inspection, our job is not to make a determination on whether something is in good working condition or not." he notes. "When something doesn't look right, we advise to hire a home inspector to take a look."

Home inspector Chris Temple says he's been there but did something about it. "We California home inspectors were faced with a very similar circumstance several years ago. When homeowner's insurance companies started getting hit with mold claims, one of their reactions was to have the home inspector complete a one-page questionnaire about the property. The questionnaire did not fall within our home inspector standards of practice, and in fact was way outside of our scope."

Temple says he and other inspectors put an end to it. "The home inspection community was generally united in rejecting this pass-along liability. Most home inspectors simply refused to do it. I believe the reason we actually got away with not doing it is because of our professional associations (CREIA, ASHI) and a lack of government regulation. The real estate appraisal associations (and insurance providers) need to unite their membership in their opposition."

Inspector Jon Rudolph has experienced similar "cross over," when working for lenders. "I have seen a trend in the last six months or so where my (buying) client's lender and even the mortgage insurance company have asked for my professional opinion on the physical condition of a subject home, stemming from the appraiser's comments," said Rudolph.

"I have no problem doing this as it helps my client in the home purchase process," Rudolph said. "After all, I am in the service business. I obtain permission from my client to respond and discuss the home inspection with the lender or related parties on their behalf.  My statements are qualified, limiting my liability with no guarantee or warranty to the home's condition and they reference the initial inspection report, as the case should be. I understand why these questions are being asked of the inspector.  I also think it's a testament to the value and credibility of the home inspection industry and service today."

Here are some questions Rudolph raises:

* Fee: "Should inspectors charge clients extra for the time and added liability exposure for these services? If so, what is an appropriate fee?"

* Unintended Consequences: "So far the requests appear to have been based on the appraiser's stated observation(s), raising concerns with the underwriter who needs a better understanding of the apparent physical condition and risk- as it may affect the loan's collateral asset," Rudolph said.  "My home inspection observations are more comprehensive; the ‘expert' opinion. Apparently the underwriter knows the appraiser is not a qualified home inspector. Consequently, each case has come with the risk of opening a new can of worms for the buyer in obtaining the loan or obtaining the loan with the initial terms, as my observations may reveal bigger and unknown concerns for the underwriter that were not identified by the appraiser."

* Possible Conflict of Interest: "My client, the buyer/borrower, has a different objective and perspective than the lender/mortgage insurer," Rudolph said. "So, a home inspection for a buyer may inadvertently cause problems with the financing because of the more comprehensive assessment of the home's physical condition and the lender/mortgage insurer are now expanding the physical condition into the lending process.  Under some scenarios, I could see a buyer foregoing a home inspection if it would conflict with the loan.  If that's the case, would the lender ‘require' a home inspection?  What if the buyer doesn't want or approve the disclosure of the home inspection to the lender? What if the buyer, by a chosen option, pays for a home inspection only to have the inspection be the basis for denying the loan or modifying terms that won't work for the buyer? They could incur some considerable out-of-pocket expenses (home inspection and appraisal) for information benefiting the lender and not them."

Lets hear your comments on this issue.Is this good for the buying consumer?

FHA appaisser are handling all hud home inspections. I have aevidence that this is still going on leaving the buyer vunerable. All property, including HUD real estate-owned properties must have the utilities inspected. HUD's M&M contractor shall permit entry to the purchaser(s) during the contract period to activate the utilities for the purposes of conducting a home inspection. If the HUD REO appraisal was completed without the utilities being activated, the mortgage lender or purchaser(s) must complete the systems check while the utilities are activated.

·          When utilities (gas, water, electricity) are not turned on at the time of the appraisal, the appraiser is expected to condition the appraisal report for a certification stating that all utilities have been tested and that they appear to be in good working order.

OR

·          Permission to turn on the utilities must be obtained by the applicant and the real estate agent during the loan process, from the HUD vendor managing the property.  Generally, the vendor will require a request from the applicant, and will advise the real estate agent and applicant as to the procedures to follow. 

OR

·          When utilities have been turned on, an inspection can be ordered through Fulfillment or may be ordered by the real estate agent.  A certification as to the inspection findings is required.

OR

·          The certification, that all utilities have been tested and appear to be in good working order, must be done by a licensed home inspector, an inspector from the local building department, a FHA compliance inspector, a licensed professional in the specific field.

This is coming from an e-mail from VP of a Big Bank Mortgage department. Take a close look at who performed this inspection

Faye,

I did see where appraisal indicated that utilities were not active at time of inspection. But according to the guide:

When utilities (gas, water, electricity) are not turned on at the time of the appraisal, the appraiser is expected to condition the appraisal report for a certification stating that all utilities have been tested and that they appear to be in good working order.

Will the appraiser's comments on page 23 and 24 suffice?  It looks like all electrical and HVAC were tested with a generator and Plumbing was tested by being pressurized.

APPRAISER TO PROVIDE UTILITIES TO BE TURNED ON AND APPRAISER TO INSPECT AND CONFIRM ALL MECHANICALS ARE IN WORKING ORDER.

VP - Mortgage Loan Officer

 I was hired to check the water heating system,Hvac,and water supply. The property was winterized when I arrived. This was two days after the appraiser performed his inspection. He missed the termited damage throughout the house,and who knows what else. I wasn't hired to perfom the complete inspection.It was already done by a appraiser. The goverment isn't making Hud standdin complince. Look at this link from Hud below.

http://www.hud.gov/offices/adm/hudclips/forms/files/92564-cn.pdf

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