Are Appraisals and Inspections Different?
Buying and selling a house is more complicated than you realize. If you are buying a house, you need to set your budget, apply for a mortgage, and negotiate a deal. If you are selling a house, you need to prepare your house, set a price, and negotiate a deal. That’s why it is always best to trust the professionals when you are doing a real estate transaction. Having an experienced realtor and a professional mortgage broker can make your life easier and get you the most value. One source of confusion when it comes to buying a home or selling a home is all the different outside people you need to evaluate your house. Do you need an appraisal and an inspection? Are they the same thing? What is the difference? The team at Peoples Choice Mortgage is here to clear up the confusion and give you some answers.
What is a Home Appraisal?
Quit simply, a home appraisal is an unbiased professional opinion about the value of a home. There are a few things that go into a home appraisal. Home appraisers conduct a visual inspection of the home to help determine its value. They look at the condition of the home, amenities and features, as well as the square footage and floor plan. Appraisers then look at the value of comparable homes in the neighborhood and real estate trends in the area. All of this information is combined to come up with the value of the home.
Who Should Get an Appraisal and Why?
Home appraisals are helpful for mainly two types of peoples; lenders and home buyers. Mortgage lenders sometimes ask for home appraisals for home purchases and often require them for a mortgage refinance. Lenders want to know the value of a home before they provide a new mortgage or refinance a mortgage in case they have to foreclose. If a homeowner falls behind on their mortgage payments, they need to make sure the value of the home matches the loan. This is a way for lenders to ensure that they do not lose significant money on a mortgage or refinance.
Homebuyers can also benefit from getting a home appraisal. Buying a home is the largest investment that most people will make, so you want to make sure it is worth it. First, home appraisals will help you determine how large of a home loan you need. Second, the value of the home can be helpful during price negotiations with the seller. It is kind of like knowing the Kelly Blue Book value of a car when you are car shopping. This is especially important in today’s real estate market where home prices have increased dramatically. Many home sellers are trying to take advantage of the fact that there are bidding wars on their homes and increasing the asking price. Home appraisals are a way to check back on this.
What is a Home Inspection?
A home inspection is also conducted by an unbiased third party; however, it is not done to determine the value of your home. Home inspections are conducted to evaluate the safety and condition of a home. Home inspectors are more concerned with whether or not anything needs to be fixed in the home or if it is move-in ready. They will inspect the roof, the HVAC system, the foundation, and anything else that is important for safety and health. This is a much more technical evaluation of your home and its components than an appraisal.
Who Should Get an Inspection and Why?
Buyers and sellers can both utilize home inspections. Homebuyers must get a home inspection before they can close on the purchase of their house. Realtors and lenders will often require inspections before closing. If any problems with the house are discovered during the inspection it can complicate the sale. Typically, the sellers will then be required to fix any important issues before the sale is completed. Sometimes, buyers will be responsible for making the fixes in exchange for a break on the price of the home. Yet, other times, the repairs are so extensive that it causes the entire deal to unravel completely.
This is why it is sometimes beneficial for sellers to get an inspection of their own before putting their house on the market. This will allow them to find any problems with the home long before they have a chance to ruin a deal. To get the most for your home it often pays to make some upgrades to your home that will have significant ROI. These upgrades can be done at the same time as you any fixes that you need to make as recommended by home inspectors. Making sure your home is in complete working order before your house hits the market can help you get more than your asking price.
Final Thoughts
Home appraisals and home inspections are an important part of buying a home and selling a home. Both of them need to be conducted by unbiased professionals who will give you an honest assessment of the house in question. A big reason why you should work with an experienced independent mortgage broker and a professional realtor is to get access to their network. Experienced professionals have extensive networks of trusted appraisers and inspectors who can give you a thorough understanding of your home’s value and its condition. If you are looking at buying a home or selling your home and you would like a professional independent mortgage broker to help you, contact us! We will be happy to help you with every step of the process and use our network of professionals to meet your needs.
