Everything that buyers need to know about inspections and appraisals.
If you’re planning to buy a home, an inspection is an important step in the process. It assesses the condition of the home before you finalize the transaction. It’s also a different step from an appraisal, which is a professional valuation of the market value of the home you’d like to buy. In most cases, an appraisal is ordered by the lender to confirm or verify the value of the home before lending a buyer money for the purchase. Today, we’re sharing the breakdown of inspections and appraisals and why they’re both important.
An appraisal helps you understand a home’s value, while an inspection helps you understand a home’s condition. The home inspection is a way to determine the home’s current condition before you finalize the transaction. The inspector will look at the age of the roof, the HVAC system, and much more. As the buyer, you have the option to discuss and negotiate any potential issues or repairs with the seller before the transaction is final.
Your real estate agent is a key expert to help guide you through these parts of the process. The National Association of Realtors says that a home purchase is typically the largest investment anyone will make, so you need to protect it. One way to do this is by getting your investment appraised. An appraiser will observe the property, analyze the data, and report their findings to their client.
“The inspection and appraisal are critical steps you don’t need to manage alone.”
In a typical transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage. When you apply for a mortgage, an unbiased appraisal is the best way to confirm the value of the home based on the sales price. Regardless of what you’re willing to pay for a house, if you are using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more money than what the home is worth.
This is especially critical in today’s seller’s market, where low inventory is driving an increase in bidding wars, which can push home prices upward. However, the lender will only allow the buyer to borrow based on the home’s value. This is what helps keep home prices in check. If there’s any confusion or discrepancy between the appraisal and the sales price, your trusted real estate professional will help you navigate any additional negotiations.
When buying a home, the inspection and appraisal are critical steps; you don’t need to manage them yourself. Call or email us today to get expert guidance to navigate the entire buying process.
