By Barry Stone
Dear Barry,
When we purchased our home it passed the FHA (Federal Housing Administration) inspection, so we assumed everything was OK and didn't bother to hire a home inspector. Then two weeks after closing escrow, problems developed with the gas furnace. After that it rained and our roof leaked in several places. Now we're told that the furnace and roof both need replacement, for a combined cost of over $6000. We thought that FHA was providing some kind of warranty but now that doesn't seem to be the case. How did we get into this mess? --Jack
Dear Jack,
In recent years HUD established a new mandate for FHA appraisers, requiring that they perform what appears at first glance to be a complete home inspection. By this fiat they enacted a dual disservice, establishing a false sense of security for home buyers while encumbering appraisers with an unfair burden of liability. In characteristic governmental fashion, our bureaucratic guardians appointed persons unqualified for the task at hand, entangling the unrelated processes of real estate appraisal and physical inspection.
Essentially, HUD required persons who are experts in determining the market value of property, whose profession requires no specific experience in either building construction or property inspection, to perform evaluations of plumbing, heating and electrical systems, roofing, foundations, site drainage, fire safety, etc.
There is a stark difference between a professional home inspection and an FHA appraisal inspection. Real estate appraisers come from diverse professional backgrounds, and no doubt, there are some with construction experience. But the majority have educational and work experience in business and finance. One might as well ask an accountant to conduct a home inspection.
To offset and justify this confusion, HUD now provides a document advising home buyers of the benefits of a professional home inspection in addition to the mandated appraisal inspection. But there are two problems with this advisement. For some buyers, the document, which contains the home inspection recommendation, is part of an endless flow of papers to be signed and initialed in the course of escrow. Unless someone specifically emphasizes the importance of a home inspection, the recommendation is often overlooked. For others, the seemingly thorough FHA inspection makes a home inspection appear redundant and nonessential.
As things presently stand, we have an unfortunate and unnecessary mess that is largely unknown except by industry insiders. Buyers should be made aware of the total inadequacy of an appraisal inspection, and HUD should be called to account for this absurd and avoidable confusion. They should rescind a mandate that is causing increased problems for the home-buying public they allege to protect.
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