If you’re a homeowner or planning to buy a home, it’s essential to understand the difference between two critical processes: a home appraisal and a home inspection. Both serve distinct purposes in the home buying and selling process. This comprehensive guide will explain the key differences, why they are important, and how they impact you as a homeowner.
What is a Home Appraisal?
A home appraisal is a professional assessment of a property’s market value conducted by a licensed appraiser. The primary goal of a home appraisal is to establish a property’s market value for the benefit of the lender (if there’s a mortgage involved). This value helps the lender determine how much they are willing to lend to the buyer.
Appraisers consider various factors, including the property’s location, size, condition, recent sales of comparable properties (comps), and any improvements or renovations. The cost of a home appraisal is usually paid by the buyer but may vary depending on the location and property type.
Why Get an Appraisal?
Lenders typically require an appraisal to ensure that the property’s value is sufficient to cover the loan amount. If the appraisal falls short of the agreed-upon purchase price, it can impact the loan approval process. Appraisals are typically ordered by the lender after a purchase agreement is signed but before finalizing the loan.
What is a Home Inspection?
A home inspection is a thorough examination of a property’s physical condition, including its structural integrity, mechanical systems, and overall safety. Home inspections are conducted by licensed home inspectors.
The primary goal of a home inspection is to provide the buyer with a detailed report about the property’s condition. It helps buyers identify any potential issues or repairs needed. This inspection covers a wide range of areas, including the roof, foundation, plumbing, electrical systems, HVAC, appliances, and more. It assesses both the functionality and safety of these components.
Home inspections are typically conducted shortly after the purchase agreement is signed and before the contingency period expires. The cost of a home inspection varies based on location, property size, and additional services requested (e.g., termite inspection).
Key Differences Between a Home Appraisal and Inspection
The main difference between these two actions is their purpose. An appraisal determines the property’s market value, while a home inspection assesses its physical condition.
Appraisals are usually ordered by the lender, while inspections are initiated by the buyer. Therefore, the buyer typically pays for the home inspection, while the appraisal cost may be covered by the buyer or lender, depending on the loan terms.
The appraisal report focuses on market value, while the inspection report details the property’s condition and potential issues. Inspection findings can be used as a basis for negotiation, whereas appraisal results typically do not affect the negotiation.
Why You Should Never Skip a Home Inspection
In most cases, a home inspection is optional but highly recommended. Buyers have the right to hire an inspector to evaluate the property before closing the deal. We STRONGLY recommend never skipping a home inspection.
Skipping a home inspection can be a costly error, costing you hundreds – if not thousands – of dollars in the long run. A skilled professional house inspection will uncover any potential issues with the property, such as structural deterioration, poor insulation, or unsafe wiring. You can save time and money in the future by avoiding costly repairs or replacements if you know what to expect before you buy a house.
A home inspection can also provide important information about the property’s condition and age, helping you to make an informed decision when it comes time to buy. Additionally, the inspection report can be used as a negotiation tool. If significant issues are found, the buyer may request repairs, a price reduction, or credits from the seller. Finally, investing in a home inspection provides peace of mind while making one of life’s most critical decisions.
Don’t make the mistake of not doing a home inspection. If you are looking for “Home Inspections in the Milwaukee area”, look no further. Wall to Wall Home Inspection Services is your fully certified and insured home inspection company. We want you to have the time you need to make proper decisions, so we provide same-day reports delivered via email to you and your Realtor. We also offer a money-back guarantee on our inspections!