Many people think that an inspection and an appraisal are the same thing, but they’re actually two separate key items that happen during the home sale process.
An appraisal is an evaluation of the value of your property. This is very helpful to the lender so they can determine the value of the home. Lenders don’t want overpriced properties, so they require an appraiser to get an accurate value of your home.
Appraisers use a variety of factors when obtaining the value of a property. They look at things like location, lot size, home size, and the condition of the property. They also use comparable home prices in the area. Federal law requires appraisers to take extensive courses to have their real estate license and to have a four-year college degree.
If a home receives an appraisal that’s less than the purchase price, there are still ways that the home sale can proceed. The seller can reduce their purchase price or the buyer can bring a larger down payment to the closing table. The contract can become renegotiable at that time.
“An appraisal and an inspection are not substitutes for each other.”
On the other hand, an inspection is conducted by a professional home inspector and it’s someone the buyer hires. It’s performed to assess any issues the home may have, including any repairs that constitute a health or safety concern.
An inspection is not required in the home buying process, but I highly recommend that you get one. They only cost a few hundred dollars, and they can save you from a future full of headaches and larger expenses. You can and should be present during the home inspection. The inspector will give you a detailed report with photos right after it’s done. From there, it will tell you whether there are any needed repairs, if you should walk away from the home, or renegotiate the price with your agent.
If you have any other questions about the difference between an appraisal and an inspection or you’re thinking of buying or selling a home, don’t hesitate to reach out to me. I’d be happy to help you.