On more than one occasion, I have had a client assume that a home inspection isn’t needed since the lender ordered an appraisal. If the purpose is to spend 20 to 30 minutes inside the home taking pictures, ensuring approximate square footage and general condition of the home, then don’t worry about a home inspection; that is the job of a home appraiser. However, if you are more interested in all the systems in the home, the plumbing, electrical, HVAC, roof, structure and major appliances, then definitely hire a home inspector. A lender requires an appraisal, so this will happen if you are taking out a loan, but no one requires a home inspection. This is someone who is hired outside of the normal required processes to purchase a home. The inspection can take between three to four hours for a professional to test all of the systems, both in and outside of the home. An appraiser, for example, will not know if the garbage disposal is working or if the bathroom sink has a slow leak, but a home inspector will call these items out. The appraiser’s job is to determine value. The inspector’s job is to determine the overall condition of one of the largest purchases you make in a lifetime. It’s worth a few hundred dollars’ investment.

Homeowner’s insurance is also a requirement by a lender. A lender has little interest in lending a large sum of money on a structure that isn’t insured for potentially large-ticket risk events. A home warranty, however, is not a requirement. A warranty is something that can be purchased by the buyer (sometimes negotiated to be paid by the seller) that covers appliances and household systems that may break during the first year. Examples of this would be a dishwasher malfunction or a water heater leak. The home warranty company would send out a technician to fix the problem. There is usually a small fee involved in having a service contractor come out. There is a catch to this. There has to be some proof that the appliance was in working condition at the time of the home inspection. This, in turn, means that if no inspection was carried out, the home warranty company is less likely to take your word for it.

Surprisingly, this exact scenario crossed my desk last week. We had a buyer who declined to have a home inspection. He opted to do his own. This complimentary “inspection” took place through a 20-minute period of time and consisted of his friend, a licensed contractor, walking through the house and looking at the windows and walls. After closing on the house, I received a phone call from the buyer letting me know the garbage disposal was not working and he needed to call the home warranty company. Fortunately, I knew the home warranty company would ask for a copy of the inspection report and he would not be able to provide one. I did, however, know the garbage disposal was, in fact, functioning at the time of the informal inspection since I had tried the switch. I was able to verify this with the home warranty company and they did come out and fix it. This would not have otherwise been addressed.

Homeowner’s insurance, on the other hand, is much broader. If a strong wind blows half the fence down, or a toilet overflows on the main floor and sends water gushing through the ceiling into the basement, destroying the carpet, the drywall and all of the electronics in the basement, the homeowner’s insurance, minus the agreed upon deductible, would cover this $49,754 event. Not that I would know anything about that … a story for another time.

This lingo is a big deal. All this terminology should be both explained and experienced during the real estate transaction. The vocabulary test will be next week. Study hard.

Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or jen@jen-fischer.com.