Appraisal and Home Inspection: What's the Difference?
If you’re planning to buy a home, an appraisal is an important step in the process. It’s a professional evaluation of the market value of the home you’d like to buy.
It’s also a different step in the process from a home inspection, which assesses the condition of the home before you finalize the transaction.
Here’s the definition of each one and why they’re both important when buying a home.
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price.
Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check.
If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you with any additional negotiations in the buying process.
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else.
You as a buyer have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final. Your real estate agent is a key expert to help you through this part of the process.
Sinply put, and as MSN explains:
“A home appraisal determines the value of a home, while a home inspection determines the condition of a home.”
Feel free to reach out! I'll be happy to help you navigate through the entire homebuying process.
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