Do Appraisers Look at Inspection Reports?
Learn if appraisers use inspection reports. Understand how property condition, even from inspections, can indirectly influence appraisal value.
When a home transaction is underway, many wonder if appraisers review home inspection reports. Appraisers generally do not rely on inspection reports in the same way a home buyer does, as their primary focus differs significantly. While both professionals assess a property, their objectives and prioritized information are distinct.
Appraisal Versus Home Inspection
A home appraisal determines a property’s market value, primarily for lending purposes. This evaluation assures the lender that the financed amount is supported by the asset’s worth. Appraisals consider factors such as location, observable condition, and comparable sales of similar properties in the area. The report helps lenders assess their risk and decide on loan approval.
Conversely, a home inspection identifies defects, safety concerns, and necessary repairs within the property’s systems and components. This detailed, non-invasive examination is for the buyer’s benefit, allowing them to understand the property’s condition before finalizing a purchase. While an appraisal is typically a lender requirement, a home inspection is often optional.
Information Appraisers Use
Appraisers primarily rely on their own assessment and specific data points to determine a property’s market value. Key information includes recent sales of comparable properties, often referred to as “comps,” within the immediate area. They also consider the subject property’s characteristics, such as size, age, number of bedrooms and bathrooms, and any notable features or upgrades.
During their visit, appraisers conduct a visual inspection of the property’s overall condition, noting obvious deficiencies that could impact value. They do not perform a detailed, component-by-component inspection like a home inspector. Instead, their assessment focuses on elements visible during a walk-through that contribute to or detract from the property’s market appeal and structural integrity.
How Significant Issues Affect Appraisal
While appraisers do not typically review detailed home inspection reports, significant issues that are readily observable or impact the property’s safety, soundness, or structural integrity can influence the appraised value. If an appraiser notes major deferred maintenance, such as a damaged roof or foundation problems visible during their assessment, these conditions are factored into the valuation. Such issues can lead to a lower appraised value or conditions imposed by the lender.
Lenders may require that certain critical repairs be completed before funding a loan if the appraiser identifies conditions that do not meet minimum property standards. This ensures the property serves as adequate collateral for the loan. Buyers often use findings from their home inspection to negotiate repairs or a reduced sales price, which can indirectly align the property’s condition and market value with the appraiser’s findings.