Home Inspection vs. Appraisal?
If you are in the middle of buying a home or getting close to wrapping up the sale of your dream house there are some things you should be aware of like home inspections and home appraisals.
The terms home inspection and home appraisal can be confusing, but don’t despair. Because you are partaking in one of the most important investments in your life you need to learn what differentiates the two and how they could impact your home value.
Yes, whether it’s a new sports car, a luxury home, or any major investment you will surely want to get a return on it. By taking the proper steps to ensure your return on the investment this can reduce your overall risks.
This is where a home inspection and a home appraisal can come in handy.
Meaning of home appraisal and home inspection
If you didn’t think there was a difference between a home inspection vs. a home appraiser, there is. Appraisals and inspections are not the same. Yes, both services include assessing the property, but for completely different reasons, and to benefit the homeowner in completely different ways.
To better understand how appraisals and inspections differ and how each can assist you as a homebuyer, keep reading.
Home appraisal
A home appraisal itself is a process required for just about all mortgage loans and is used to determine the estimated market value of a home.
What an appraiser looks for during a home appraisal
To determine the value, a third-party home appraiser considers the home’s location, condition, and the value of similar recently sold homes in the vicinity; these factors are referred to as comparables.
Home inspector vs. home appraiser
The home appraiser unlike a home inspector uses the process of walking through the home, research comparable, and makes a final home appraiser’s report. The report provides the final determination of the home’s market value and is used in the lender’s final decision to approve the loan amount.
Also note, the lender usually cannot lend more than 97% of the appraised value of the home, so if the home appraisal is returned lower than the offer price you’ll have to pay the difference out of pocket, renegotiate with the seller or forget about that particular hone. If the appraisal is returned higher than the offer price, you will immediately have more equity in the home.
Choose the right home inspector
A home inspection can be a great benefit to you but if you hire the wrong home inspector for the job, it can be the opposite. When looking to hire a home inspector, ask for recommendations from your real estate agent, family members, or friends.
Hire a qualified home inspector After you get a few suggestions, research the home inspector and the company by asking for references and reading online reviews. You need to find and hire someone who’s certified, insured, and won’t be influenced while doing their examination. In other words, don’t hire someone who also performs repairs and renovations. Why? They may make recommendations based on the future business they could gain from you. If possible, do attend the inspection so you can learn more about the home and ask the inspector questions.
Home inspector vs. appraiser career
During the inspection process, it is the job of the home inspector to look at the structure, roof, attic, basement, electrical system, plumbing, exterior, and other things in the home. This is what is learned as part of the career path the inspector has chosen when deciding to become a home inspector.
What a home inspector looks for
Bottomline a home inspection is a full examination of a home to determine its current condition and find out of there are any issues with the home completed by a home inspector.
Be prepared for a home inspector
Knowing where home inspectors will look can help you focus more clearly when you make pre-inspection repairs. Make sure the home is clean and ready to be surveyed by the home inspector. Don’t overspend on items that don't contribute to the inspection, like paint touch-ups, etc.
Home inspection process
If you’re included during the inspection, the inspector will take you through the process, point out issues and let you know if there are any potential future problems.
Home inspector’s findings On completion of the full inspection, you’ll be reported the inspector’s findings. This report should describe what was inspected and inform you of what needs repair.
Home inspector’s suggestions Based on the inspector’s report you may negotiate with the seller and ask if they will complete the repairs or pay for part (or all) of the repair costs.
H4 (1) Still curious about home inspection vs home appraisal
Are you still wondering about the difference between a home appraisal and home inspection? It’s pretty straight forward: a home appraisal determines the value of the home and a home inspection determines the condition of the home.
More helpful differences between a home inspection and home appraisal
In the end, you might want to choose both a home inspector and a home appraiser. Why? Each serves a different purpose, and there are even more differences than mentioned above between an appraisal and an inspection:
· Home appraisals are required by a lender. Home inspections aren’t.
· You must arrange for an inspection yourself, but the lender will order an appraisal for you.
· An appraisal could impact your ability to obtain the loan needed. An inspection won’t.
· Appraisers usually only uncover things immediately noticeable but inspectors utilize special devices and training to learn of underlining issues.
· Homebuyers can walk through the home with the inspector during the inspection. However, an appraiser usually performs the appraisal process alone.
· An inspector will discuss and show you things during the inspection process. An appraiser only shares the findings when the report is completed.
· A home inspection only examines the condition of the home when making the assessment. A home appraisal considers the condition of the home, comparable home prices, lot size, home features, area crime rates, and school areas
· The inspector and appraiser have different skill sets, are trained, and certified in different processes as well as different areas of expertise.
Benefits of home appraisal Don’t be so quick to say no to an appraisal. Why? Because it’s required doesn’t mean you shouldn’t take advantage of the service. There are ways an appraisal can benefit:
· Aids in getting approved for a mortgage.
· Ensures you’re not getting ripped off and paying more for the home than what it’s worth.
· It provides a possible reason to drop the sale price of the home if the appraisal comes in low.
· It ensures you pay the right amount of property taxes.
Mortgages and home inspections
Experts state an appraisal is indeed a requirement for getting a mortgage because it’s in the best interest of the lender. On the flip side, an inspection should be a requirement for you to buy the home because it’s in your best interest.
Here’s how you can benefit from getting an inspection:
· Can aid in protecting your investment and reduce any foreseeable risks.
· Can help determine whether you should buy the home and make you feel good about your decision.
· Help you feel safe and comfortable when residing in the home.
· Provide a good understanding of your home’s condition.
· Discover more about the ins and outs of your home.
· If you’re building a home, it will ensure the best construction was a dome.
· Provide leverage when negotiating with the seller.
Appraisals and home inspection costs How much does an appraisal and/or a home inspection cost? It’s not cheap to do either service, so be prepared.
According to one website site such as HomeAdvisor, you can expect to pay between $300 – $400 for an appraisal and between $270 – $400 for an inspection. However, the prices for either service could be more if you have a larger home, a multi-unit home, or a complex property. Same thing for an inspection, where the cost may vary depending on the size of the home, its location, or any extra home amenities you want to be inspected.
In the end, a home appraisal and home inspection can work together to protect you and ensure the large investment of buying a home is a good one. Therefore, the expert recommends you get to opt for both when you’re going through the important homebuying process.