What is a Home Appraisal?
A real estate appraisal is a detailed report into the monetary value of a home. An appraiser will indeed carry out a home inspection, though it’s far less thorough than that carried out by a home inspector. This is because they’re essentially looking for different things.
Typically, an appraiser will visit the home for 30 minutes or so, checking numerous elements around the place, including the plumbing system, potential structural damage, square footage, number of bedrooms, etc. They compare their findings to the information on the property records to ensure it’s all up-to-date. This is just the first step carried out by an appraiser, who will then compare similar property prices in the area and neighborhood factors in order to make an accurate estimate of the true value of the property.
What is a Home Inspection?
Home inspectors will take a more thorough look at the property, taking into consideration areas such as the roof, overall structural integrity, plumbing and electrical systems, drainage, foundations and even appliances. Their role is to inform the buyer of the condition of the property and highlight any defects and necessary repairs.
Using the home inspector’s report, the buyer can make a decision based on their findings, as to whether or not to continue the purchase, request repairs or lower their offer. A home inspector is not mandatory, but it’s in the best interest of the buyer to have one. In this way, they’re more informed as to the true condition of the property and don’t have to take the seller’s word for it.
On the face of it, there are few differences between an appraisal and a home inspection. Both require a professional to visit the home and make an examination of many of the same elements. Similarly, both impact the buyer prior to completing the purchase of a home. At the end of both, the buyer will be handed a detailed report as to the state and condition of the home and it will be the buyer that typically pays for each.
Despite the similarities, however, there are several differences as well, the main being that an appraisal deals with the value of a home, whereas an inspection deals with the condition of a home. An appraisal will enable the lender to decide whether to cover the loan or not, while an inspection will allow the buyer to weigh up the pros and cons of investing in a certain property.
An appraisal takes more information into consideration than simply the state of the home – for example proximity to local amenities and crime rate – to arrive at an accurate value. On the other hand, a home inspection takes a more thorough look at the property’s physical attributes, often taking 2 or 3 hours to complete, as opposed to the half hour visit an appraiser will make.
What’s a Buyer to Do?
If you’re planning to take out a mortgage in order to buy a property, the chances are your lender will require an appraisal before agreeing to terms. Depending on the report, they may refuse the loan if the appraised value is lower than the sale price, or request you make a larger down payment.
Regardless of how you go about purchasing property, no one requires you to have a home inspection. However, by neglecting to carry one out, you may find that the home you have just bought is in dire need of major repairs. Replacing outdated wiring or fixing damaged foundations could cost far more than you had budgeted for.
When you’ve found a property you want, it’s wise to make an offer, but a conditional one, with a clause being dependent on the outcome of a home inspection. This covers your offer and legally allows you to pull out if the home inspection report reveals that major repairs are required. Of course, you can also use the report to lower your offer or request that the seller makes the appropriate repairs.