Appraisals versus Inspections, What's the Difference?
May 21, 2021
Most real estate agents will tell you this is a common question people ask. Both appraisals and inspections are both very important when buying a home. An appraisal is basically a professional calculation of the current market’s value of the home. A lot of times this is required by the lending company to verify the home’s actual value before they will lend a buyer the money to purchase the property.
An inspection is different but just equally as important as the appraisal for the person buying the home. Some buyers might even say the home inspection is even more important before buying a home, especially an older home. The home inspection is an assessment of the condition of the house you are wanting to purchase. During this process a professional will complete a checklist to see if there are any issues with the home itself. So why are both these things so important to complete them before buying a home?
When you go to purchase a home through a lending company, the best way to confirm the value of the home or property is through an appraisal. So, many of your lending companies require you to have one done because no matter what you are willing to pay for a home, if you are getting financing on the home the bank will want to ensure they are not lending you more than the home is actually worth. Many will tell you that is extremely important in today’s seller’s market because so often homes go into a bidding war and people are already asking top dollar for properties.
Lenders will only allow you to borrow an amount based on the current value of the home so even if the market causes bidding wars and pushes pricing up the lending companies asking for appraisals kind of helps keep the market prices in check in a way.
An inspection of a home is crucial when purchasing a home. Basically this is an assessment of the condition, safety and overall current state that the home is in. When having an inspection the inspector will look at things like: the HVAC system, hot water heater, age of the roof, electrical outlets, etc. Should there be anything the inspector finds they notate that so that the potential buyer can discuss those things with the agent and possibly negotiate to have them corrected or something prior to the closing date. Having a professional real estate agent is KEY during this process and helping make sure you are taken care of during the purchase of your home.
To sum it up, both the appraisal and the inspection are crucial steps in the home buying process. But do not try and tackle these tasks alone, get an agent that will work for you and help you through all of this process. I will be happy to get to work for you on your next real estate purchase and I will guide you through all these processes with as little stress as possible! If you are looking to buy or sell a home contact me today!