When buying a home, you can expect to jump through many legal hoops, two of which are the home inspection and the home appraisal. These two steps in the home buying process are often confused—and understandably so—but it’s important to understand the differences between a home inspection and a home appraisal.
What Happens During a Home Appraisal?
Real estate appraisals determine the value of a home or commercial property, so the mortgage broker knows how much is reasonable to lend the buyer. The appraiser will walk through the property—inside and out—while taking measurements and making notes about the various features of the home and neighborhood.
The home appraiser will also compare the home with other similar houses that were recently sold—usually within the last 90-days—to gauge whether the seller’s asking price is within a reasonable range.
Many sellers and buyers are surprised to learn what matters (and what doesn’t) to a home appraiser. In general, during a home appraisal, the appraiser will be looking for facts: number of stories, square footage, number of bedrooms and bathrooms, included appliances, the parking situation, and the quality of the neighborhood itself.
What Happens During a Home Inspection?
Much like what matters to a real estate appraiser, people are also often confused about what matters to a home inspector. A home inspection seeks to ensure the safety of the home. An inspector may look for mold infestation, foundational issues, or problems with the plumbing or electric infrastructure of the home.
The results of the home inspection may give the buyer some room to negotiate a lower offer, depending on what needs to be fixed. If major issues are uncovered, the mortgage lender may not approve the loan at all until the issues are addressed.
A big difference between a home inspection and a home appraisal is that inspections are not mandatory, but real estate appraisals are. That being said, it’s always smart for the buyer to request a home inspection so they know what they are getting themselves into.
Generally, a home appraisal happens first, since it is required for the loan. Once it is determined that the home’s value matches the amount of the loan, the loan can go to underwriting, then approval…and—finally—closing!
Contact Appraisals Unlimited, Inc.
Appraisals Unlimited, Inc. offers residential and commercial appraisals in the Northeast, and beyond. We have performed thousands of appraisals, and pride ourselves on fast turn times and a team of appraisers with vast local knowledge. Contact us today, or order an appraisal online!