The Difference Between an Inspection and an Appraisal

The Difference Between an Inspection and an Appraisal

When purchasing your first home, you might encounter various unfamiliar terms and conditions. You probably have a basic understanding of what an inspection involves, but you might be unclear about its necessity or how it differs from an appraisal. To simplify, here’s an explanation of each and their significance for you as a homebuyer.

Home Inspection

Once you’re under contract on a home you want to buy, getting an inspection becomes a crucial step in the process. An inspection provides a clear understanding of the safety and overall condition of the home, which is vital 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.”

If anything raises concerns during the inspection—such as the age of the roof, the condition of the HVAC system, or other issues—you have the option to discuss and negotiate potential repairs or adjustments with the seller before finalizing the transaction. And don’t worry, you won’t have to navigate this process alone. Your real estate agent will advocate for you and handle negotiations with the seller.

Home Appraisal

While the inspection informs you about the current condition of the house, an appraisal determines its value. As 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 what you’re willing to pay for a house, if you’re using a mortgage to finance your purchase, the appraisal safeguards you from overpaying and protects the bank from lending more than the home is worth.

If there’s ever a discrepancy between the appraisal value 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 distinct but equally crucial steps when buying a home, and you don’t have to handle them alone. Let’s connect today so you can have expert guidance from start to finish.