During the home buying process there will be two types of inspections that you'll come across.
The appraisal and home inspection. These are both important when purchasing a home.
Since buying a home is a very large investment, we recommend getting both inspections to give you peace of mind. You want to make sure you are buying the right house.
A home inspection and appraisal serve different functions, but both give you the insights you need to avoid large financial missteps.
The appraisal determines the value of the home, done by a licensed appraiser.
A home inspection is an inspection that determines the condition of the home. For example, does the AC work properly, is the electrical and plumbing working?
Appraisal: The goal of an appraisal is to determine the fair market value of a property. It is conducted by a licensed appraiser. When buying a home, an appraisal is required to determine the value.
The cost of the appraisal will depend on the area and how big the home is. Typical costs are anywhere from $450 to $800.
Home Inspection: A licensed inspector will inspect the condition of the home.
The utilities must be turned on so the inspector can test out the following:
After completing the inspection, they will provide a report with recommendations on items in the home that should be repaired or replaced.
The cost of a home inspection is anywhere from $300 to $700 depending on the location and how big the home is.
Home inspectors look for safety issues and are not concerned with anything cosmetic.
If there is a whole in the wall, or a crack it will be reported in the inspection report, but things like peeling paint or wallpaper will not be reported.
A home inspection occurs after an offer has been accepted, and it is usually done within the first 2 weeks.
The buyer or the buyers real estate agent is responsible for ordering an inspection and making sure that it's scheduled.
No. It is the buyer's choice. If you are buying a house, we recommend getting a home inspection, unless you are interested in gutting and replacing everything.
An inspection can uncover issues that can cost a fortune.
As a buyer - you can submit a request for repairs to the seller. Only list items that are crucial, like the health and safety repairs.
It's up to the seller to accommodate the repair request. If the seller says no, the buyer can continue to move forward with the purchase, or cancel the transaction.
If you waive your inspection contingency this means you're buying the home "as-is," and any issues discovered after closing will fall 100% on you to repair.
Make sure you talk to your real estate agent about the contingencies.
Yes, when purchasing a home, an appraisal is required. Lenders need to know how much the property is worth in order to provide financing.
This ensures that you aren't overpaying for a home and the lender isn't financing a home loan for more than the property is worth.
When getting a home loan for a property, the lender is the one that will order the appraisal, this is a federal requirement.
The appraiser assigned to the property has to be an individual who has no direct or indirect interest in the transaction, so the appraiser that is assigned to the property will be assigned randomly.
1. Assessment of property
An appraiser will walk through the home, taking note of its condition, measure all the rooms, take pictures, write notes.
2. Review of comparable sales
The appraiser will use the findings of their walk-through to identify similar comps that have sold in the neighborhood using the MLS system. The recent comps are what help the appraiser determine the market value.
3. Final report
A final report will be delivered to you with the market value of the home, including photos and descriptions of comparable sales. This report will be emailed to you from the loan officer, if you are getting a loan.
The appraisal will have information on measurements and details about the home, condition of the property, available utilities, neighborhood demographics, housing trends in the area, information on recent properties that have sold in the area, upgrades made to the property.
In addition to the items listed above, the following items will also be included:
The main goal is to figure out how the home compares to other similar properties in the area.
The appraiser will take note of all the items above along with photos, find comparable properties nearby, and compile all the information into a report that provides the current value of the home.
Low appraisals can happen for a couple reasons:
Buyers who are using financing have a few options to work around a low appraisal:
If you've waived your appraisal contingency, renegotiating the purchase price isn't an option for you.