Home inspections and home appraisals may sound like the same process. They both deal with a professional coming out to a property and evaluating it. However, they are two separate procedures done for different reasons. This blog will explain their differences and clear up this common misconception.
What is a home inspection?
As the name suggests, a home inspection is an examination of a home to uncover any potential problems it may have. The inspector, who the buyer assigns, will do a thorough evaluation of the house observing things such as, but not limited to:
- The roof
- HVAC systems
- The foundation
- Electrical wiring
- The basement and attic
Following the inspection, the inspector will draft a detailed report of their findings. This allows the buyer to see if the home has any major defects, and if so, either walk away or negotiate repairs with the seller. While the inspection is not required, it is highly recommended. The buyer is responsible for this fee.
What is a home appraisal?
A home appraisal determines the monetary value of a property. Because a lender doesn’t want to fund a loan that’s more than the home’s actual value, they will send out a third-party professional to:
- Check for any obvious deficiencies
- Look for improvements made (a new deck, remodeled kitchen, etc.)
- Document the number of bedrooms and bathrooms
- Measure the square footage of the home
They’ll also take into account previous selling prices of comparable homes in the area, the location of the home, crime rates, etc. When the appraiser is finished, they’ll write a report with the final estimate and the factors that contributed to that number.
And while the appraisal is done to ultimately protect the lender, it can also be beneficial to the buyer, too by letting them know if the seller is asking too much for the home. Also, it’s worth noting that this fee is usually covered by the buyer.
The home appraisal is one of the most important steps to buying a home.