Lu Ryan

Appraisal? Inspection? What is the difference?

inspection and appraisal

In the simplest of terms, a home appraisal will determine the value of the property and the inspection will determine the condition of the home.

When you are buying a home, the terminology can be overwhelming.  Outlining these two important terms can help you understand how they are different and both essential in the process. Appraisal and Inspection are part of two different area of the contract to purchase a home.  The appraisal is part of the professional evaluation by the lending institution to confirm the value of your home. The inspection is handled by the buyer and ordered to assess the condition of the home.

A home purchase is typically your largest investment.  The financial process can be daunting. Once you get preapproved for a mortgage through your bank, credit union, or mortgage broker the lender begins their due diligence. The appraisal is ordered by the lender and it is an unbiased assessment of the property you are purchasing.  Regardless of the price you are willing to pay for the house the lender will make sure through appraisal that the bank does not loan you more than what the house is worth.  This is not about the windows that do not stay open or the color of the walls in the living room.  It is about the location, comparable sales, size, number of rooms, bedrooms, baths, garage space and finally all over condition.  The appraiser walks through measures, accounts for actual physical layout, accounts for each room and the exterior amenities. The lender will only let the buyer borrow on the value that comes from the appraisal.

The home inspection is ordered by the buyer with the inspector being selected by the buyer.  It is the best way to determine the current condition of the home.  During the inspection, all mechanical, structural, plumbing, HVAC, electrical, roof, etc. will be scrutinized. As the buyer you can inspect for anything, water, septic, sewage, any element of the house that concerns you. Even a paranormal inspection if you choose.  Your real estate agent will help you through the process of knowing which inspections are vital for your area.  Once you have the inspection you will have the opportunity to negotiate potential issues or repairs with the seller within the parameters of your contract.

FINAL THOUGHTS….Bottom line consider a good realtor to help you maneuver through the potential pitfalls of the real estate transaction.


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