When purchasing a home with a VA loan, veterans should hire a home inspector. This inspection will help identify major issues with the home – before purchasing it. As such, we’ll use this article to review questions to ask a VA home loan inspector to make the most of the process.
Specifically, we’ll discuss the following:
- VA Home Loan Appraisal vs. Home Inspection
- Benefits of Home Inspections
- Questions to Ask Your VA Home Loan Inspector
- Final Thoughts
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VA Home Loan Appraisal vs. Home Inspection
Homebuyers frequently – and incorrectly – use the terms appraisal and inspection interchangeably. However, these are two completely different events. And, before discussing VA home loan inspections, it’s important to highlight the difference between a VA appraisal and a home inspection.
VA Home Loan Appraisal
Prior to approving a VA loan, the Department of Veterans Affairs requires a home appraisal. The VA-approved lender working with the buyer requests this via an online portal, and the VA will randomly assign an appraiser. As part of this VA appraisal, the appraiser will note any obvious needed repairs to ensure the home meets the VA’s minimum property requirements. However, appraisers do not conduct any operational checks of appliances or mechanical systems. Rather, the appraiser’s primary responsibility is to estimate the value of the property.
The VA wants to make sure its approved lenders don’t issue loans for more than a property is worth. The appraisal accomplishes this goal. For example, assume a buyer and seller agree on a $300,000 purchase price. If the VA appraiser determines that the home is only worth $250,000, the VA will not approve a loan for greater than $250,000, regardless of the $300,000 contract price. In this situation, the buyer would need to A) pay the $50,000 difference in cash, B) ask the seller to lower the price, or C) walk away from the deal.
Home Inspection
Whereas these VA appraisals protect the VA and the VA-approved lender, VA home inspections protect the buyer. The VA does not require home inspections for VA loans, but buyers should absolutely pay for them. Simply put, home inspections tell you what’s wrong with a property. This lets you make a more informed decision about whether or not to purchase a home.
During an inspection, a licensed home inspector will conduct a visual assessment of a home’s structure, mechanical systems, and appliances. This will include looking at the roof, walls, floors, ceilings, windows, and doors to confirm general condition and functionality. Additionally, inspectors will test all appliances and HVAC systems to make sure they work properly. For plumbing and electrical, inspectors will conduct basic function tests, but they won’t go to the level of pulling back drywall to inspect pipes and wires.
Ultimately, a home loan helps the buyer identify major issues with the property. It will not provide any opinion on a home’s value. That’s what the appraisal does.
Benefits of Home Inspections
If the VA doesn’t require home inspections, why should I pay for one? This is a frequently asked – and understandable – question. Home inspections provide buyers tremendous benefits, and these benefits more than outweigh the out-of-pocket costs. Of note, inspections offer the following advantages:
Contract Inspection Clause
Most contracts include a home inspection clause. This allows the buyer a certain amount of time to complete an inspection and bring any issues discovered in the inspection to the seller’s attention. And, if the seller refuses to address a problem, this contract clause lets the buyer walk away from the deal without losing the earnest money deposit. Bottom line, a home inspection helps protect you from unintentionally buying a money pit in need of massive repairs.
Negotiating Power
The above contract inspection clause gives buyers tremendous negotiating power. If a home inspection discovers a major issue, buyers can ask sellers to repair it prior to loan closing. Sellers are absolutely within their rights to refuse, but then buyers have the right to leave the deal. Most sellers want to sell their property as quickly as possible. Even if they won’t fix the problem, a professional inspection report may provide you the leverage to negotiate a reduction in selling price.
Learn Your Home
Even if the home inspection doesn’t uncover any major issues, the education justifies the expense. Most inspectors have no problem with a buyer joining for the inspection. This lets the buyer walk through the house and learn about it with the help of a professional. For example, say you don’t know much about HVAC units. A home inspector can explain how yours functions, basic troubleshooting measures, and preventative maintenance techniques.
Learn about Real Estate, in General
Home inspectors have tremendous knowledge about real estate and associated maintenance issues. As such, you should look at any time spent with these professionals as an outstanding educational opportunity. You’ll definitely learn something about your own home, and if you spend an entire inspection asking questions, there’s a good chance you’ll learn some great information about real estate, in general.
Questions to Ask Your VA Home Loan Inspector
If you decide to conduct a home inspection for your VA home loan purchase – and you absolutely should – there are some key questions to ask the inspector. Broadly speaking, you should ask questions pertaining to two categories: 1) the inspector’s qualifications, and 2) the inspection itself. This information will help you get the most out of your VA home loan inspection.
Questions about the Inspector’s Qualifications
- How long have you been a professional home inspector, and how many inspections have you completed? This will help you confirm competence. If an inspector can’t provide a clear history or references, he or she probably is not qualified.
- Do you typically focus on residential inspections? While overlap exists, commercial and residential inspections are different enough that inspectors tend to focus on one or the other. You’ll want to make sure your inspector specializes in residential properties.
- Are you a member of a professional association? Most home inspection professionals belong to a state or national professional association. Membership in one of these further indicates competence, and you should ask to see any associated IDs.
- Do you offer repairs based on inspection results? Some professional associations forbid this as a conflict of interest, whereas others do not. As such, you should ask the inspector up-front about his or her policy on inspection-related repairs.
Questions about the Inspection
- What do you cover in the inspection? Most states have their own home inspection requirements. Accordingly, your inspector should, at a minimum, cover the items required in your state.
- How much time will the inspection take? Though times vary by property, most inspections take two to three hours. If the inspector says it’ll only take 30 minutes, you’re likely receiving an inadequate inspection.
- How much will the inspection cost? You should ask this question before agreeing to any service. To avoid unwelcome surprises and post-service disagreements, make sure you agree on the home inspection costs up-front.
- Can I attend the inspection? As explained above, inspections are great educational opportunities. Confirm with the inspector that he or she will allow you to follow along on the inspection. If not, you may want to hire someone else.
- What does the inspection report include, and when will I receive it? Most home inspectors will provide you an example report if requested. This will help you set your expectations for your own report. With respect to time, most inspectors complete their reports within 24 hours of the inspection.
Final Thoughts
A VA home loan appraisal is not the same as a VA home loan inspection. The former confirms value and protects the lender, while the latter examines the property’s condition and protects the buyer. And, despite the VA not requiring home inspections, the benefits of an inspection more than justify the additional costs. As such, veterans using the VA home loan – or any mortgage product – should definitely hire a home inspector before purchasing a home.
Maurice “Chipp” Naylon spent nine years as an infantry officer in the Marine Corps. He is currently a licensed CPA specializing in real estate development and accounting.
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