The Difference Between an Inspection and an Appraisal

You might encounter unfamiliar terms and conditions when you're ready to purchase your first home. You probably have a basic understanding of what an inspection is, but you may need clarification on why it's necessary or how it differs from an appraisal. To simplify, here's an explanation of each and what they signify for you as a homebuyer.

Home Inspection
Once you have a contract on a home you want to buy, getting an inspection is a crucial part of the process. An inspection provides a clear understanding of the safety and overall condition of the home, which is essential for such a significant transaction. As a recent Realtor.com 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."

Suppose there are any concerns during the inspection process, such as the roof's age, the HVAC system's condition, or any other issues. In that case, you can discuss and negotiate with the seller before the transaction is finalized. Don't worry - you don't have to go through this process alone. Your real estate agent will advocate and negotiate with the seller on your behalf. This is a reason you need a local real estate EXPERT.

Home Appraisal
While the inspection informs you about the house's current condition, an appraisal determines 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."

No matter what you are willing to pay for a house, if you are using a mortgage to finance your purchase, the appraisal safeguards you from overpaying and the bank from lending 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 assist you in navigating any additional negotiations to bridge the gap.

Bottom Line
The inspection and the appraisal are two distinct but equally important steps when purchasing a home. You don't have to handle them alone. Contact us today for expert guidance from beginning to end.

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