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Home Inspections and Home Appraisals
It’s easy to get confused between a home inspection and a home appraisal. Here’s everything that you need to know about both of them.
Aug 1, 2022
Appraisers and home inspectors are two different things. Appraisers look at the value of a property, while inspectors look at its condition.
A home inspection is not required by a lender, but it's often a condition of financing. In other words, if you're buying your home with a mortgage loan, the bank may require that you get an inspection before they agree to lend you the money.
Why? Because while they are being very careful to check out whether you can afford to buy the house (your credit score and income), they also want to know that the house isn't falling apart or in need of major repairs. A home inspection will help them gain more insight into this for themselves so that they can feel comfortable making their lending decision based on accurate information about your home purchase instead of just taking your word for it all being fine and dandy.
An inspection tells you whether there are problems with the property you can't see from looking at it.
A home inspection is a visual examination of the physical structure and systems of your home. If you're buying or selling a house, it's important to have an inspection before making a final decision about the property.
A typical home inspection will cover the following areas:
- Exterior structures (roofs, siding, exterior walls)
- Floors, ceilings, and walls (floors are checked for moisture damage; walls are inspected for cracks or other structural issues)
- Heating and cooling systems (air conditioning units; furnaces)
Getting your inspection done before you apply for your home loan can speed up the mortgage process.
Getting your inspection done before you apply for your home loan can speed up the mortgage process. The lender will need to see the inspection report before they can close on the loan, and it's likely that they'll want to see it sooner rather than later. It's also good for sellers, because it gives them a chance to fix any problems with their home before they put it on the market.
The difference between an appraisal and an inspection is that an appraisal is a financial evaluation, and an inspection is a detailed look at the condition of the property.
An appraisal is a financial evaluation of a property. It is done by a licensed appraiser and the results are used to determine if you can get financing for your home.
In contrast, an inspection is done by a third-party inspector (usually with some form of certification) who will examine the physical condition of your house. This report will detail important issues that relate to how long it might take for you to sell or rent out your house based on its current condition.
Home buyers need to wait for the appraisal to complete their mortgage application, but there's no time limit for getting a home inspection done.
Appraisals are a much more detailed evaluation of the property's value. They focus on comparable for the house and neighborhood, and they also consider market conditions. Appraisals can take a few days or even weeks to complete, depending on how busy lenders have been lately.
Home inspections are a faster process because they don't require as much research. They're more physical than financial in nature—the inspector checks out things like electrical systems, plumbing fixtures, roofing materials and doors/windows before writing up an inspection report that lists all problems found during their visit.
Lenders need an appraisal to be sure they'll get their money back if they must foreclose on the home loan.
A home appraisal is a professional opinion of the value of your home. An appraisal is required by lenders to be sure they'll get their money back if they must foreclose on a loan and take possession of the property.
Appraisers look at comps, or comparable homes in the neighborhood that have recently sold. Appraisers also consider improvements made to your house such as remodeling or adding new rooms or bathrooms, as well as how long it's been since those improvements were completed.
Because appraisals can vary from one home to another, lenders will usually ask for two appraisals: one based on recent sales prices in your neighborhood, and another based on what similar homes nearby are listed for right now (known as "market value").
Appraisers look comparable homes in the neighborhood that have recently sold.
Appraisers base their analysis on the value of comps, or comparable homes in the neighborhood that have recently sold.
The appraiser will look at recent sales of homes like yours and compare the prices. If your home seems to be worth a lot more than other similar homes in your neighborhood, you could be in for a surprise when it comes time to sell—or buy another house.
Appraisals take longer than inspections
Appraisals take longer than inspections, and they can hold up closing on a home sale. It usually takes around two weeks for an appraiser to get back with results, although some lenders can get them sooner if necessary. However, this isn't guaranteed and depends on where you live and who's appraising your house.
You should also be aware that the appraisal process may not go smoothly. Appraisers sometimes disagree with each other about the value of a home (or business or other property), or they might have difficulty determining market value because of unique features at your house or business location. You may be required to hire an additional expert (like an architect) to help resolve these issues before proceeding with the sale of your property—which could add even more time onto what was already going to be a long process
If possible, try booking your inspection first so that you know what repairs need to be done before getting an appraisal done on it; this will save both parties from having wasted time when scheduling appointments later down the road
Overall, the process of getting an appraisal and a home inspection done can be time-consuming. But it's worth it to know exactly what you're buying before you make that final decision. If you have any questions about the process that we didn't cover in this article, feel free to reach out!