Throughout the buying and selling process, you will hear the terms inspection and appraisal. You may find yourself wondering exactly what they are and what the difference is between them. To better understand inspections and appraisals and how they’re different, here is a quick 101 lesson.
The Difference Between Inspections and Appraisals
In short, a home inspection is used to educate the buyer on the home’s general condition. A third-party will need to provide a thorough assessment without any conflict of interest, so the buyer is confident with completing the purchase. An inspection can turn up anything from simple fixes to major structural issues, which is a critical part of home buying and selling. It’s one of the reasons why it’s so important to disclose anything you’re aware of as the seller.
Alternately, the home appraisal determines the house’s approximate value for the lender. The sale could be stalled or even changed if a home’s value doesn’t match the offer presented. An appraiser will look at multiple factors in their valuation, including the home’s location, nearby schools and public services, the size and condition of the house, and the value of comparable homes in the area.
What to Know Before Selling Your Home
Before the inspection, it’s a good idea to review any possible problems with the house and make any fixes that are easy to do on your own. This can include anything as simple as fixing a running toilet, replacing cracked caulk, or servicing the furnace. You will want to disclose anything more significant, such as the date your roof was replaced, or furnace installed.
The appraisal will check the house’s condition, but not as thoroughly as the inspection. Be sure to tidy up the home, take your pets with you, and make sure every room is accessible. You can also provide a list of upgrades you’ve made to the house, including cost, dates, and receipts if accessible, so the appraiser can figure that into their assessment.
The Process of Buying a Home
As a buyer, you should have a basic knowledge about the inspection process. Buyers usually reserve the right to perform a home inspection in the purchase contract and are responsible to select an inspector and pay for the inspection. The fee will vary based on the size of the home, but it typically runs around $400 to $500. Make sure to be mindful to schedule the inspection when you can be there. Being present during the inspection can provide you peace of mind and ensure you see the same things the inspector finds.
You will also be expected to pay for the appraisal, though your mortgage lender will order it. The lender will then use this information to determine if the value of the home matches your offer. If it does not, you may have to put more money down or amend your offer.
Questions about inspections and appraisals? Give me a call to discuss your options and go over the process.