What Homebuyers Need to Know About Home Inspections and Appraisals
First-time homebuyers often find themselves inundated with new terminology: “escrow,” “amortization,” “closing costs,” among others. The terms “home inspection” and “home appraisal” also get tossed around a lot during the home buying process, so it’s important to know what each one means and how they’re different. Understanding these differences can help first-time home buyers navigate the purchase process and understand the benefits of home inspections and home appraisals.
What Is a Home Inspection?
A home inspection is a close, detailed physical inspection of all features of a property to ensure the overall function and safety of its rooms, appliances, and systems (such as HVAC, electrical, and plumbing). During a home inspection, a professional, licensed home inspector will spend several hours and a multitude of tools examining inside and outside the home–including the roof, yard, basement, foundation, and chimneys–and identifying any major issues that require repair or attention before new homeowners move in.
The home inspection occurs before the actual purchase of a home, and its purpose is to protect potential buyers by informing about the exact condition of their desired property. During an inspection, the potential buyer is allowed, even encouraged, to ask the inspector questions and discuss recommendations for repairs.
There is a growing trend in which home buyers forego the home inspection to make their offer look more desirable to the seller. However, skipping the home inspection is not a recommended practice, as it can lead to hefty repair costs down the line.
The potential buyer receives a full, detailed report a few days after the inspection to guide their decision-making process. If the potential home buyer determines that the property has too many issues that they’re not willing to invest time and resources into repairing, the home buyer can back out of the contract.
Average Cost: $425 – $600 depending on the size of the property
Duration: 1 to 3 hours depending on the size of the property
What is a Home Appraisal?
Quite different from a home inspection, a home appraisal is not concerned with the overall safety or function of a home: the main purpose of an appraisal is to determine a home’s value. Similar to a home inspection, a home appraisal involves the appraisal professional going inside the home and observing the exterior, but there are no measurements taken or safety issues assessed.
During a home appraisal, the appraiser develops a professional opinion of a property’s value. To do this, the appraiser researches the property’s public records, identifies comparable recent home sales, and checks out the home’s features: square footage, cosmetic updates, landscaping and lot size, number of bedrooms and bathrooms, etc. Part of the appraisal also includes an assessment of the surrounding neighborhood’s appeal.
However, there are instances in which the mortgage lender allows a drive-by appraisal, when an appraiser only sees the outside of a property. This surface-level observation of exterior aesthetics is then combined with public records research and knowledge of neighborhood home values.
While a home inspection protects the potential buyer, a home appraisal is designed to protect the lender by determining if the property is worth the amount of money that the buyer wants to borrow to purchase it. The potential home buyer does not meet or interact with the appraiser. Once the appraisal report is submitted, and if the appraisal amount is below the purchase price agreed to in the contract, the mortgage lender may adjust the amount it will lend the home buyer.
Average Cost: Can vary for a single family home, with VA appraisals in our area as high as $800.
Duration: Usually one week; sometimes less for “drive-by” appraisals
If you’re planning on buying a home and need to schedule a home inspection, call South Sound Inspections for reliable and personable services.