An appraisal and an inspection are both important steps in the process of buying a home. Though similar processes, they have different reasons for being performed and different impacts on the purchase.
Read on to discover the difference between an appraisal and an inspection.
An appraisal is an expert opinion of the value of a home. It is typically done by a licensed appraiser who has experience and knowledge in estimating the worth of a property. The appraisal is generally required by the mortgage company to ensure that the property is a good investment on their part. If the home does not appraise for the value you have offered for the home, you may need to pay the difference in cash or renegotiate the price you will pay for the home. If terms cannot be agreed upon, you may wish to terminate the contract.
An inspection, on the other hand, is a more in-depth look at the condition of the home. It is typically done by a licensed home inspector who checks the property for any structural, electrical, plumbing, roofing, and other issues. The inspection report is often dozens of pages long - even on a home that's in good condition or on a new construction home - giving a thorough look at each part of the home. Any items that do not meet current code standards will be noted, as well as any items that need work - from the minor and inexpensive to the major and very expensive. The inspection is generally ordered by and paid for by the buyer and is usually performed during the option period. If the home does not meet the condition standards you expected, you can terminate the contract or renegotiate the terms of the contract. Your real estate professional (me!) can walk you through your options and help you make an informed decision.
Both appraisals and inspections can help ensure that you are making a sound investment when purchasing a home. If you have more questions about these two procedures, email me!
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Carolyn Barnes, Your REALTOR® & Katy Expert