The Home Inspection

We cannot emphasize enough the necessity of an extensive home inspection. The $200 to $500 a good inspection costs is a pittance compared to purchasing a home with serious defects. The Colorado real estate sales contract provides you, the Buyer, with the right to conduct a thorough home inspection.

Don’t let anyone convince you not to have one. A professional inspection will not only give you a detailed picture of the state of the home, but it also provides you with an important exit point should the home have serious defects.

A professional home inspector performs the second inspection. Inspections are designed to uncover defects in the property that may affect its safety, livability or resale value. A home inspection doesn’t necessarily include cosmetic issues, and a home inspection is not a guarantee. It is an objective report that outlines the state of the home you’re planning to purchase, which is why it is so important to hire a certified home inspector.

Once the inspection is completed, you can decide if there are defects that you want the seller to repair or replace. Then your agent can help you draft that request.

If you have a government loan, a third inspection may be made during the appraisal. This is more of a mini inspection focused on specific conditions of the home, and should not be considered a substitute for a full inspection by a qualified and trusted inspector.

Appraisals

When you borrow money to buy a house, the lender will require an appraisal; a third party estimation of the home’s fair market value. An appraiser considers many factors, including the prices of comparable homes that have recently sold, as well as the condition, size, amenities and location of the property being appraised.

Obviously an appraisal is necessary to keep the lender from lending more than the house is worth. That’s just bad business. In the vast majority of cases, everything will be fine and the house will be either appraised at or above the sale price.

Occasionally, the appraisal will come in for less than the home’s selling price. At that point, the bank will either accept the difference as an acceptable risk, come back to the buyer for additional money to make up the difference or turn down the loan based on the appraisal. If this happens, your agent can help you terminate your contract to purchase the property.

In slow markets, the appraiser often has trouble finding comparables, requiring him or her to go back up to 18 months ago compared to the customary six months. In particularly hot markets, the appraiser may be looking at data from the week before that is already out of date because prices are rising so fast.

In Colorado, your lender is responsible for ordering the appraisal. They will have a list of appraisers that they like to use, which is fine. Ask for a copy of the appraisal. If the bank hired the appraiser, he or she is not required to give you a copy, even though you’re actually paying for the appraisal. But if you ask for a copy you have to be provided with one.

Tax assessments have little bearing on the numbers an appraiser will come up with. In many communities, a tax appraisal can be as much as 85% less than a private appraisal. When the tax bill arrives, you’ll be grateful for the difference.

We have a series of informative reports, including one that gives great information to buyers on:

• Your Personal Inspection
• Questions to Ask a Prospective Home Inspector
• What a Professional Home Inspection Should Cover
• The Home Warranty
• Homeowner’s Insurance

To be directed to our special reports page where you can get a PDF copy of this report, please fill in the information below.