Cmcp Chapter 6: Inspection And
Appraisal Questions And Answers With
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Inspection deals with the condition of a home, whereas an appraisal deals with
the value of a home. The most common collateral is real estate property.
Inspections and/or appraisal of real estate property are conducted by the bank
through its credit investigators and appraisers whose main tasks revolve around
inspection of property and its evaluation and appraisal where credit is requested
by a prospective borrower from the bank. - ANSWER✔✔Nature of Property
Inspection and Appraisal
An inspection will allow the buyer to weigh up the pros and cons of investing in a
certain property, while an appraisal will enable the seller to establish the value of
a property. - ANSWER✔✔Purpose of Property Inspection and Appraisal
The value most commonly sought in an appraisal. - ANSWER✔✔Market Value
The amount that an insurance company will pay out if an asset that it has insured
is deemed a constructive or actual total loss. - ANSWER✔✔Insurable Value
The value that assumes the company will remain in business indefinitely and
continue to be profitable. It is an assumption that a company or property is
expected to continue operating well into the future (usually indefinitely). -
ANSWER✔✔Going concern Value
The value of the assets that remain if the company goes out of business and is no
more a going concern. - ANSWER✔✔Liquidation Value
The value of a residence for tax purposes and takes comparable home sales and
inspections into consideration. It is the price placed on a home by the
corresponding government municipality to calculate property taxes. -
ANSWER✔✔Price and assessed Value
1. It Provides an "out"
2. Safety
, 3. Reveal Illegal Additions or Installations
4. Protection
5. Negotiating Tool
6. Forecast Future Cost
7. Determine "Deal-Breakers"
8. Learn to protect your investment
9. Reveal the Big Picture
10. Insurance - ANSWER✔✔Functions/Objectives of Property Inspection
A quality home inspection can reveal critical information about the condition of a
home and its systems. This makes the buyer aware of what costs, repairs and
maintenance the home may require immediately, and over time. If a buyer isn't
comfortable with the findings of the home inspection, it usually presents one last
opportunity to back out of the offer to buy. - ANSWER✔✔It Provides an "out"
A home inspection can detect safety issues like radon, carbon monoxide, and
mold, which all homes should be tested for. - ANSWER✔✔Safety
A home inspection can reveal whether rooms, altered garages or basements were
completed without a proper permit, or did not follow code. If a house has illegal
room additions that are un-permitted, it affects the insurance, taxes, usability and
most of all the overall value. - ANSWER✔✔Reveal Illegal Additions or Installations
Home inspections are even more critical if you are buying an "as-is" foreclosed
property or short sale. Dwellings that have been boarded often develop
hazardous mold problems, which are costly to remedy and pose health concerns.
- ANSWER✔✔Protection
Home inspection report presents an opportunity to ask for repairs and/or request
a price reduction or credit from the seller. - ANSWER✔✔Negotiating Tool
A home inspector can approximate the installation age of major systems in the
home like plumbing, heating and cooling, and water heaters. They can diagnose
the current condition of the structure itself, and tell you how long finishes have
been in the home. All components in the home have a "shelf-life." -
ANSWER✔✔Forecast Future Cost
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