Appraisal vs Inspection
Know the Difference
You got an offer accepted! Now its time to investigate the property. Appraisals and Inspections are often confused with each other or seem redundant. These are two very different reports. Both give the homebuyer great information. However, here is the easiest way to distinguish the two: The appraisal is for the lender giving you a mortgage, and an inspection is for the buyer to thoroughly inspect the condition of the property. The appraisal is ordered by your lender, and an inspection is ordered with through your realtor.
Home Appraisal
The main purpose of the appraisal is to show the bank that the home is worth what you are buying it for. If you are not getting a mortgage, an appraisal is not required. Even with a mortgage an appraisal may not be required. This usually happens when the buyer is making a large down payment or there was an appraisal recently done on the property. Your lender will let you know if an appraisal is required shortly after getting an offer accepted.
It is nice for a homebuyer to know what a home appraises for. This can give piece of mind that they are paying market price for the property. Residential appraisals are based on recent comparable sales. They look at properties that have sold recently in close proximity and with similar home features.
While appraisals don’t look at every detail of a home, they can note major issues to warn the lender. If there is a significant problem with the home, the appraisal may hinder the lender from issuing the mortgage until the issues are remedied. If you are looking at a home that appears to have major issues, check with a mortgage broker to see if there will be issues getting financing.
Home Inspection
A home inspection does a detailed report on every little thing that could be wrong with a home. These reports can often look scarier than the issues really are. No home is perfect, and not a single inspection report comes back without pointing out lots of things. If you see something in your inspection report that worries you, talk through it with your real estate agent. They have seen countless inspection reports. Realtors may be able to provide quick solutions, refer you to someone who can make the repairs once you close escrow, or even ask the sellers to fix or pay for issues that come up on an inspection report.
