A common misconception is that appraisals and home inspections are basically the same thing, however they are actually very different.Both of these are very important to the transaction when buying or selling a property, and it’s important for both parties to know the difference between the two.
Home Appraisals: A home appraisal is basically an educated guess as to the net worth of a property. Financial institutions require appraisals. Also, if you’re looking to get a mortgage loan, then the property must have an appraisal. Generally, appraisals are paid for by the seller and are done at closing. Appraisals are needed because they let the bank or lender know what the loan collateral will be set at for a worst-case scenario situation. The appraisal is determined by an appraiser who walks around the property looking at the value of the home, along with any problems or issues.
Home Inspections: A home inspection is an inspection of the physical condition of the home. Home inspectors look for issues or defects in the property’s structure, its working systems, and physical components. Home inspections generally take place after the buyer and seller have signed the contract. This can guide the seller on final repairs that need to be done, and also can sometimes alter the selling price if a major issue is found during the inspection. One important thing to remember is that home inspections are NOT required when buying or selling a property.
Knowing the differences between appraisals and inspections is very beneficial when buying or selling a home, but what’s even more important is having a good real estate agent to guide you through the process. Give me a call!