Oriana Suarez | May 7, 2023
Buyers
If you’re planning to buy a home, both an inspection and an appraisal are important steps in the process. The first one assesses the condition of the home before you finalize the transaction while the appraisal is a professional evaluation of the market value of the home you’d like to buy, most likely ordered by the lender. Here’s the breakdown of each one and why they’re both important when buying a home.
Here’s the key 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.”
The home inspection is a way to determine the current state, safety, and condition of the home before you finalize the sale. If anything is questionable in the inspection process – like the age of the roof, the state of the HVAC system, or just about anything else – you as a buyer 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 you through this part of the 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 appraisal! 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.”
When you apply for a mortgage, an unbiased appraisal (which is required by the lender) is the best way to confirm the value of the home based on the sale price. Regardless of what you’re willing to pay for a house, if you’ll be using a mortgage to fund your purchase, the appraisal will help make sure the bank doesn’t loan you more than what the home is worth.
This is especially critical in today’s sellers’ market where low inventory is driving an increase in bidding wars, which can push home prices upward. When sellers are in a strong position like this, they tend to believe they can set whatever price they want for their house under the assumption that competing buyers will be willing to pay more.
However, the lender will only allow the buyer to borrow based on the value of the home. This is what helps keep home prices in check. If there’s ever any confusion or discrepancy between the appraisal and the sale price, your trusted real estate professional will help you navigate any additional negotiations in the buying process.
Bottom Line
In conclusion, a home inspection and an appraisal are both crucial steps in the home-buying process. While an inspection focuses on assessing the condition of the property, an appraisal is used to determine the market value of the home. As a buyer, you need to be aware of the differences between these two evaluations to ensure that you're making a wise investment.
Partnering with a trusted real estate professional who can guide you through this process is highly recommended. If you're in the market for a new home and need expert guidance, don't hesitate to reach out to our office for assistance. Contact us today to learn more!
Stay up to date on the latest real estate trends.
December 15, 2024
If you're hesitant to sell your house, you're not alone. Many homeowners are concerned about higher mortgage rates or finding the right home in today’s market. The goo… Read more
December 1, 2024
With home prices and mortgage rates fluctuating, down payment assistance (DPA) programs are becoming increasingly crucial for buyers.
November 29, 2024
Hispanic Americans are not only shaping the future of homeownership in the U.S., but they are also breaking ground in wealth creation through real estate
November 15, 2024
If you’re planning to sell your house, knowing how long it might take is a big part of planning your next steps.
November 1, 2024
This fall, buyers have more homes to choose from than usual thanks to an unexpected uptick in new listings. A drop in mortgage rates at the end of summer motivated mor… Read more
October 28, 2024
In this blog, we dive into effective home staging strategies for real estate agents looking to enhance their listings and grow their business.
October 15, 2024
Deciding whether to sell your home is about more than just financial factors—it’s about your lifestyle too. This blog highlights the top personal motivators, like movi… Read more
October 1, 2024
Nearly 80% of first-time homebuyers qualify for down payment assistance, but only 13% actually utilize it. Don’t miss out! Learn about down payment options, grants, an… Read more
September 29, 2024
With nearly half of all homebuyers starting their search online, your listings need to stand out. Learn how to enhance your online presence with professional photos, v… Read more
We strive to become your go-to Real Estate Advisors. Book a free consultation today and let’s get started with a buying or selling plan for your home customized to your unique timeline.