Do I need an inspection after appraisal?

Question

Hello BP community members. I am about to make an offer on my first property and have a question. I have a great opportunity with seller financing of a 7-unit multifamily that is already fully occupied. I just got the appraisal that was done 9 months ago from the seller this afternoon.  Should I still pay for an inspection? Being my first property, I would appreciate any suggestions on this. Thank you as always and thank you Josh and Brandon!

Edmund Ricker · Answer

@Sean Haardt

I would definitely recommend getting an inspection because an appraisal and an inspection differ.

The appraisal can point out things that must be fixed to secure financing, but an inspection goes deeper in depth and looks at all areas of the house.

For me it is a "no-brainer" and money well spent.

Good luck on your journey and I hope this helps.

Ed

Jeff B. · Answer

When you apply for the loan, the lender will still call for their appraisal - - just like I pull my own credit reports and reject any provided by the applicant.

• The goal of the appraisal is to tell the lender the value of the property in their eyes to set the maximum loan to grant
• The goal of YOUR inspection is to determine what if any repairs should be made, from which you negotiate who repairs & pays or a price change.

Steve Vaughan · Answer

Since you are new, I agree with @Edmund Ricker.  Go ahead and get an inspection.  Costs here used to be about $75/unit for multi's when I hired inspectors back in the day about 10 years ago.

With cash out, bank-financed transactions the inspection has always netted me more than it costed.  One saved me over $9k through the findings, but only costed $350 on a SFH.

With favorable seller financing, I tend to go much easier on the seller.  I verify the roof, foundation, structure and major mechanicals are good, but don't nickel and dime them.  A commercial appraisal usually runs me $3500. Origination fees, lender's insurance, etc will all be avoided with seller financing so keep that in mind when you request fixes after the inspection.

What type of financing @Sean Haardt?  What type of deed will you receive?  Those are extremely important as well.  A Land Contract and a QCD are far less valuable to you than a Note and DofT and a warranty deed.  Cheers!

Sean Haardt · Answer

Thank you @Edmund Ricker, @Steve Vaughan, and @Jeff B.! You guys are great. I really needed your insights. Psyched to finally take action. I will get the inspection. Thanks again.

Do I need an inspection after appraisal?

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