Is home inspection the same thing as home appraisal? To some people it is, but there is a difference. It is important to understand that during the selling or buying process your home turns into a product.
Here is the thing, Customers or buyers want value for money i.e. most buyers don’t want to buy a home that will cost hundreds if not thousands of dollars to make it habitable. Because of that homes need to be evaluated and there are two ways to do that, one you can get it appraised or two you can get it inspected. Some people choose to do both, why?
It makes the selling or buying process smooth and the results can be used during negotiations.
Your home is a product thus it has value, an appraisal is simply a professional opinion of a home’s value. When you borrow or get a mortgage, your home turns into collateral. The thing about lenders is they don’t want to lend you more money than they have to or they don’t want you to over borrow. That’s because if you fail to pay they will be left with the house, if the house was overvalued it means that the lender won’t be able to sell the house or property for enough money to cover the loan. In simple terms, an appraisal is the bank’s way of protecting itself.
Although the report is sent to the lender, you will have to cover the cost.
During the appraisal process, the appraiser compares your property or home to similar properties in the area sold within the last 90 days. The factors that determine value include:
Just like home appraisal, home inspection is done for the benefit of the buyer, seller and lender. The simplest way to define it is a complete inspection of a home or property intended to check and evaluate the safety and of the structure and mechanical condition. The buyer normally foots the bill.
Home inspections are important in that they give you a clear picture of exactly what you are buying. The benefit of paying for one is it helps you avoid buying a home that has problems that you can’t afford. For example, if a foundation or structural issue is found, you can decide the best way forward i.e. either buy as is, look for another property or negotiate repairs.
Generally, the major difference between an appraisal and inspection, an appraisal is an expert opinion of the value of our home done primarily to protect the lender. On the other hand, a home inspector is there to educate you about the true condition of the home you intend to buy or sell. They are not substitutes for each but both options are there to protect you or to make it easier for you to get funding.
Both options will cost you money but in the long run you will be very happy that you got them done unless of course if you hire an inexperienced person to do either.