The Difference Between Inspection and Appraisal

When you decide to buy your first home, you may encounter terms and conditions you are unfamiliar with. While you may have a general understanding of what an inspection is, you may be unsure of why you need one or how they differ from appraisals. To keep things simple, here's an explanation of each one and what it means for you as a buyer.

Home Inspection

Once you have agreed to buy a home, getting an inspection is an important step in the process. An inspection provides a clear picture of the safety and overall condition of the home, which is critical for such a large transaction. As a recent article explains:

“A home inspection is something that protects your financial interest in what will likely be the largest purchase you make in your life—one in which you need as much information as possible.”

If anything during the inspection process raises concerns, such as the age of the roof, the condition of the HVAC system, or anything else, you have the option of discussing and negotiating any potential issues or repairs with the seller before the transaction is finalized. And don’t worry – you don’t have to go through that process alone. Your real estate agent will be your advocate and negotiate with the seller for you.

Home Appraisal

While the inspection tells you about the current state of the house, an appraisal gives you its value. Bankrate explains:

“When buying or selling a home, an appraisal verifies that the sale price of the home is in line with fair market value. This ensures the homebuyer doesn’t pay more than the home is worth, and the mortgage lender doesn’t lend more than it is worth.”

Regardless of how much you are willing to pay for a house, if you are going to use a mortgage to finance your purchase, the appraisal keeps you from overpaying and the bank from lending you more than the home is worth.

If there is any confusion or discrepancy between the appraisal and the agreed-upon price in your contract, your trusted real estate professional will guide you through any additional negotiations to close the gap.

Bottom Line

The inspection and appraisal are two separate but equally important steps in the home-buying process, and you do not have to handle them alone. Let’s connect today so you have expert guidance from start to finish.

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