Home Buying in Pennsylvania>Question Details

Anonymous, Home Buyer in Pennsylvania

Ethical Issue? My real-estate agent convinced me not to get a home inspection and rely on FHA appraisal...

Asked by Anonymous, Pennsylvania Mon Jul 27, 2009

My real estate agent convinced me to rely on the FHA appraisal instead of getting a home inspection since the house is only 12 years old. I am a first-time home buyer and I believe that my real estate agent convinced me to do this in an effort that was not protecting my best interests...am I wrong? I found out that the FHA does not do a home inspection but does an appraisal and that there are indeed some serious items (i.e. termites) that are not considered in the appraisal (all after the fact). Is there a real-estate agent out there that would ever convince someone to buy a house without a home inspection and rely on the FHA appraisal process?

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It is hard to believe a real estate agent would steer you away from a home inspection. A home inspection is strongly suggested, preferably with a certified home inspector. A home inspection is very thorough and will reveal every little detail about the home, inside and out, even if it is minor. The buyer should be well informed about the house so that they can decide whether or not to persue the home purchase depending on how extensive the work the home needs, or to negotiate with the seller on repairs . A home inspection is so important. This is the largest investment you will make in your lifetime. Therefore, you should find out as much as you can about it. Would you buy a stock without getting information about the company? It's the same for a home.

If there are some serious concerns, consult a real estate attorney to help you out.

Good luck!

Brigita McKelvie, REALTOR, e-PRO, GRI
Keller Williams Real Estate, Bethlehem, PA
Office: 610-867-8888 Direct: 610-393-9424
E-mail: brigita@brigitamklv.com
Web: http://www.RuralAndHorseProperties.com
Blog: http://activerain.com/blogs/brigitam
1 vote Thank Flag Link Tue Jul 28, 2009
FHA appraisal is not an inspection. Even if you are buying a home As IS you should have an inspection and an option to cancel the contract contingency in agreement of sale.
It is important to work with a Buyers agent who will look out for your best interests.
Web Reference: http://www.gitabantwal.com
0 votes Thank Flag Link Sun Aug 2, 2009
I would never tell a client not to get a home inspection. I have suggested in instances in which the property is an "As Is" or when the seller is not going to make any repairs for the buyer to get a more cost effective inspection of the property by using a general contractor or if the buyer knows someone in the construction business to check the property for any issues, but never would I recommend not getting a home inspected at all. And termite is a given regardless of the condition of the home.

Remember your buying the home not the agent. You have to do what you believe would serve you best. Yes the agent may be saving you money now, but the few hundred dollars you spend now will save you a lot later on.

By the way, is your agent also the listing agent, if he/she is then maybe the agent is protecting the seller who he/she owe the higher standard of care to.

Samantha Weekes, Realtor
Exit Realty "The Tri-State Group"
1080 N Delaware Ave Ste 200
Philadelphia Pa 19125
Ofc: 215-425-2200
Cell: 215-687-2629
0 votes Thank Flag Link Sat Aug 1, 2009
Have you all ready purchased the home. Many buyers prefer not to do a home inspection due to expense, in these circumstance we have buyer sign declined this service.

Unconfirmed why an agent would "talk you out of inspection" termites depends on damage to the property, is the agent related seller in anyone OR professional relationship OR a new agent who not seasoned yet ?

Contact an attorney or buyers agent broker.

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Jul 27, 2009
I don't know the terms and contingency periods written into you contract but since you waived the home inspection, the seller is under no obligation to allow one. It sounds as if they are allowing a home inspection for your peace of mind. However, they are not under any obligation to do so. I can understand why the seller would be a bit upset as they entered into the contract believing that there was no home inspection contingency and now they are informed that you now want an inspection. What probably would not have been an issue has turned into one due to a Realtors bad advise. You risk being in default and losing your deposit money should you walk away from the contract. Hopefully the inspection report will be acceptable to you and you can move forward to closing. I wish you the best.
0 votes Thank Flag Link Mon Jul 27, 2009
UPDATED QUESTION: The seller is willing to let me have an inspector come in and inspect the property, however they will not let me extend the inspection contingency period -- if anything serious comes up, I can elect to walk away but will lose $3k of hand money, The closing date in the sales agreement was set for a Sunday (we need to come to terms on another closing date), so I am trying to use this as leverage to extend the inspection contingency period.

Once again I want the house but I want "peace-of-mind" to ensure that this house will not end up being a "money pit" in the next few years. I am trying to correct the mistake that I was mislead into making...

Please let me know your thoughts...

Thanks again for your help everybody...
0 votes Thank Flag Link Mon Jul 27, 2009
Never! In fact, once I know escrow is opened that is the first appointment I schedule. I like to get the inspecion done as early as possible so that any repair requests, repairs, and/or credits can be negotiated early in the contingency period. This isn't the first time I heard something like this though. Another story I heard was about someone from out of state wanting to invest in a REO (Foreclosed) property. The agent, (not sure if it was the listing agent or not) told her that on bank-owned properties, a home inspection is not allowed. Of course, this is absolutely wrong as well. here in CA, you as the buyer have the time frame allotted in the Purchase Agreement to personally, and through a 3rd party inspect the property and satisfy yourself as to its condition, verify the sqft, find out about wood destroying pests, and look into any issues that the seller is disclosing to you.

My suggestion...if you cannot get an extension of the contingency period, either get an inspection done quickly or cancel the escrow (that is IF you have not already removed your contingencies). Sounds like someone is trying to hide something about the condition of the house.
0 votes Thank Flag Link Mon Jul 27, 2009
As a home inspector, I am a bit biased here (naturally) but most agent I know - especially those who have been around quite some time - encourage heir buyers to have a complete home inspection, and often recommend termite inspections and radon testing as well.

All inspectors are different, and there are those who provide such a basic inspection with a CYA style report that tiptoes around things, that they can be nearly useless to the buyers. In fairness, some agents and buyers who encounter these inspectors often wonder why they paid for an inspection at all, since it is not terribly helpful and often full of recommendations for evaluations by other professionals.

Inspections are important not just to identify material defects, but also to help set your expectations for the longevity of the major systems (Heating, AC, Plumbing, Electric, Structure and Roof). A house that was a steal can quickly turn into a money pit if you get caught in the cycle of upgrading and replacement that is needed on every home.

In very general terms, upgrades and repalcements of some costly items will be needed approximately every 15-20 years. Roofing shingles last 20-30 on average, with most builders and homeowners opting for the lower quality/cheaper shingles. Water heaters need to be replaced about every 10-14 years. Heating systems vary depending on the type buy can average 20-30 years. AC units vary very widely but most HVAC pros I know estimate they will last about 12-15 years (in PA at least). Structural issues can appear at any time, so that is usually a key focus of an inspection.

So, the trick to finding a real bargain is to find a home where these items have been recently replaced, or replacement is not imminent (0-3 years). WIth a 12 year old home, your roof, plumbing, electrical and strructure should be well within their life span, but there may be speficic items that require upgrading/correction as a result of changing safety standards or improper work perfomed on those systems(usually smaller cost items, $1000 or less). The water heater may likely require replacement soon, and the AC system probably doesnt have many good years left. The heater should last you more than a few more winters.

Termites can appear at any time, and it is stronly encouraged to have this inspection - it may even be required by your lender (call your mortgage company to find out - you may not be able to close without a termite cert).

I am surprized that you were encouraged not to have an inspection, and hope that this is of some help to you in learning more about the home and what to look for. Of course, if I can be of more help or answer specific questions, feel free to call or email me.
Web Reference: http://www.SherlockHI.com
0 votes Thank Flag Link Mon Jul 27, 2009
Hello Anonymous:

Assuming that you are purchasing this home from a private party and not as part of a short sale or foreclosure, you have several actions you might take:

1. Bring this issue up to the attention of your Realtor's broker. I doubt highly that the Broker will be happy to hear that his/her agent circumvented one of the basic inspections for the home. Those of us who work in this field professionally as full-time agents would NEVER tell a client not to perform as many inspections as he/she feels is necessary to feel comfortable about the home purchase.

Explain that her advice has jeopardized your thorough review and determination of the soundness of the home, and ask for his help in determining your logical "next step." Obviously, you'll need more time to perform the inspections and to make a good decision based on the information you learn.

2. You need to extend the closing date, and you may also need to extend the contingency period for the home. Contingencies, here in California, need to be removed within 17 days. If you're still in the period when you can assert contingencies, then do so and request additional time on this issue.

Unfortunately, as you now know, an appraisal is made to determine the value of the home and is never a reliable substitute for a thorough inspection completed by a professional hired to do this job. While an appraiser may note items of concern on the report, they do not look under, over and around the house with the detailed "eye" of an inspector.

Although I do agree that a 12 year old home is unlikely to have the type of serious problems that may occur in an older home, not knowing what repairs or costs might be anticipated as a new owner is certainly not a comfortable feeling. Talk to the broker and work out a plan of action to resolve this matter and give you more time without jeopardizing the purchase of the home.

Grace Morioka, SRES, e-Pro
Area Pro Realty
0 votes Thank Flag Link Mon Jul 27, 2009
This was an agent that was referred to me because she is the wife of my co-worker and she has 20+ years experience in real-estate. She was to represent ME, but I strongly believe that this did not happen. Closing was set for August 9th in the sales agreement (which is a Sunday), and now we need to agree to another closing date. I am now asking for the contingency period to be extended (then I will agree to another closing date) so that I may correct the problem, but it does not seem like the seller is willing to budge.

I understand that it was ultimately my decision to forgo the home inspection, but this was because my real-estate agent consistently reminded me that the FHA Inspection (she consistently used the word "inspection," but later I found out that it is only an appraisal) is thorough and that there is no need for a home inspection.

We are weeks away from closing, and I really want the house, but I cannot proceed without a home inspection knowing what I know now about how un-thorough the FHA appraisal actually is...I really need some advice here and I would greatly appreciate any support that you can provide.

I also appreciate your responses to my previous inquiry...THANK YOU!
0 votes Thank Flag Link Mon Jul 27, 2009
Absolutely not! The FHA appraiser looks for safety issues, handrails, tripping hazards, peeling paint, asbestos, roof etc. but is in no way to be construed as a home inspection. The home inspector looks for material defects such as but not limited to structural, roof, HVAC, windows, electrical, moisture problems, safety issues, plumbing, appliances. Unless you had a mold addendum, waiving the home inspection also waives your right to a mold inspection. I am surprised your Realtor would put him/herself in that position.
0 votes Thank Flag Link Mon Jul 27, 2009
First and foremost, I am not an attorney nor have I ever played one on tv. Get legal advise. that being said....

You're kidding, right? Question is, was your agent "your agent"? I mean, did you sign a contract with him to represent you? Or was he the listing agent? If he was the listing agent, what would you expect? That he works for you? Neither I nor any agent I know would EVER suggest to "not get an inspection".

On page 9 of the Agreement of Sale (A/S-R Revised 9/05) paragraph 31 explains about the Real Estate Recovery Fund. This can be used AFTER a civil case is made against the agent.

You may also learn about how to file a complaint at the PA Department of State http://www.dos.state.pa.us/bpoa/cwp/view.asp?a=1104&Q=43…

I must caution you that filing a false complaint will come back on you.

Terrence Charest, e-Pro®
Century 21 Associates
905 Easton Road
Willow Grove, PA 19090
Cell (Preferred): 877.614.1494
Office: 215.659.5250
Fax: 215.659.5550

“Giving to Those Who Gave”
0 votes Thank Flag Link Mon Jul 27, 2009
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