Appraisal Inspection Vs. Home Inspection
Excerpts: Why are these roles often confused? What is an Appraisal “Inspection”?
The root of many misconceptions about the appraisal inspection is the word “inspection” itself. It is true that as part of the appraisal process, the appraiser might perform some sort of onsite quality, condition, and functional utility survey of the property to determine its relevant characteristics and if it meets certain standards. For example, to the general public, the FHA requirements that an appraiser must operate certain systems in the home (plumbing, electrical, HVAC) seems similar to what a licensed home inspector does.
The Oxford Online Dictionary defines inspection as: “Careful examination or scrutiny”
Merriam-Webster’s Online Dictionary defines inspection as:
“The act of looking at something closely in order to learn more about it, to find problems, etc.; the act of inspecting something”
It’s somewhat of a benign definition, is it not? There’s nothing really scary there, yet many appraisers attempt to avoid confusion, and (potentially) limit their liability, by avoiding use of the word “inspection” entirely. Many appraisers use euphemisms for this term in their appraisal reports, such as “property visit” or “viewing.”
Even FHA got into the euphemism game with the publication of Handbook 4000.1, which went into effect in 2015. The words “inspect” or “inspection” generally do not appear in reference to an appraiser’s obligations. Instead, the words “observe” and “observation” are used.
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My comments: USPAP has never required an inspection. USPAP defines “Personal Inspection” as the following: a physical observation performed to assist in identifying relevant property characteristics in a valuation service.”
The word “inspection” is used in various locations, such as Advisory opinion A02, including Minimal level of Inspection.
The fourth exposure draft for the 2023 version has Section 1: “Review of Requirements about Disclosing a Personal Inspection.” Final comments deadline is today, July 23, 2021.
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NOTE: Please scroll down to read the other topics in this long blog post on bedroom closets, Updated FHA 4000.1, bias, unusual homes, mortgage origination stats, etc