Are you buying a home? First, you need an inspection to assess the house’s condition before finalizing the transaction. On the other hand, an appraisal evaluates the home’s market value. Lenders usually order an appraisal to verify the house’s value before lending money to buyers. Both steps are critical, and your real estate agent can guide you.
Here’s the critical difference between an inspection and an appraisal. Bankrate says:
“In short, while an appraisal helps you understand a home’s value, inspections help you understand a home’s condition.”
A home inspection assesses the home’s current state, safety, and condition before the sale is finalized. Suppose anything raises questions during the inspection, such as the roof’s age or the HVAC system’s requirement. You can negotiate with the seller for necessary repairs or changes before completing the transaction. Again, your real estate agent can provide crucial expertise to guide you through this process.
The National Association of Realtors (NAR) explains:
“A home purchase is typically the largest investment someone will make. Protect yourself by getting your investment appraised! An appraiser will observe the property, analyze the data, and report their findings to their client. For the typical home purchase transaction, the lender usually orders the appraisal to assist in the lender’s decision to provide funds for a mortgage.”
An unbiased appraisal is crucial when applying for a home mortgage. It confirms the home’s value based on the sale price and ensures that the bank does not loan you more than it is worth, regardless of your willingness to pay. This is especially important in today’s sellers’ market, where low inventory leads to bidding wars and prices.
Sellers in a strong position may set prices exceeding the home’s value, but the lender will only allow you to borrow based on the appraised value. This helps keep home prices in check. If there’s any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional can help you navigate additional negotiations in the buying process.
Home inspection and appraisal are crucial steps in home buying, but you don’t have to manage them alone. Get expert guidance by connecting with me today. We’ll help you navigate the process with ease.